India’s Balance of Trade

The balance of trade or Net Exports is the difference between the monetary value of exports and imports of output in an economy over a certain period of time. It is the relationship between a nation’s imports and exports. A favorable balance of trade is known as a trade surplus and consists of exporting more than is imported; an unfavorable balance of trade is known as a trade deficit or, informally, a trade gap. The balance of trade is sometimes divided into a goods and a services balance.
India’s Trade Deficit over some years is as follows:

India had a favourable balance of trade only in 1972-72 (Rs. 104 Crore) and 1976-77 (Rs. 68 crore) .

The control on import on the one hand and promote export on another hand is what Government of India taking some measures to control Balance of trade.

Why India’s Balance of Trade is unfavourable?

India has been incurring high expenses on Petroleum Bill. In 2006-07, India’s oil import bill was about US $ 48 billion. In 2007-08, it had gone up 40 percent, to US $ 68 billion. By way of comparison, the net invisibles surplus and the current account deficit were US $ 73 billion and US $ 17 billion (1.5 percent of GDP) in 2007-08, versus US $ 53 billion and US $ 10 billion (1.1 percent of GDP) in 2006-07.
For the April-June quarter of 2008-09, oil imports grew by 50 percent to US $ 25 billion from US $ 17 billion in April-June 2007-08. This was at an average price of about US $ 118 a barrel, which is close to where the price settled today (August 5). This translates to US $ 100 billion a year. So, other things equal, that is another US $ 32 billion added to the current account deficit, or over 2 percent of GDP added to the current account deficit.


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