INDIA’S MERCHANDISE TRADE deficit has ballooned following the spike in crude oil prices to over $100 a barrel. Total imports are running at more than $65 billion a month. Exports have averaged $40 billion a month. That leaves an unsustainable trade deficit of $25 billion a month or $300 billion a year.
India imports 83 per cent of its crude oil due to a decades-long failure to find new oil wells to supplement ONGC’s declining output. Gold imports have added to the import burden. Higher commodity prices and a pick-up in India’s manufacturing industry which relies on imported components has exacerbated the trade deficit.
What can be done? First, it’s not all bad news. Services exports are ticking along nicely. The depreciated rupee has helped Indian infotech services companies like TCS, Infosys and Wipro boost exports. The target for services exports in 2022-23 had been set at $300 billion. That is likely to be achieved.
The other two key forex inflows are foreign direct investment (FDI) and remittances from Indians working abroad. Last year, despite Covid-19’s lethal Delta wave, India received $83 billion in FDI. Much of this was due to the slew of FDI deals by Reliance industries but FDI this year promises to be robust as well.
Remittances too are on the rise. In calendar 2021 they totalled $87 billion. The United States recently overtook the United Arab Emirates (UAE) as the largest remitter of foreign exchange from Indians abroad. In 2022-23, estimated services exports ($300 billion), FDI ($80 billion), and remittances ($90 billion) would together result in $470 billion flowing into India. Imports of services (an estimated $150 billion) need to be deducted from this forex inflow. That leaves us with nett inflows of roughly $320 billion from services exports, FDI and remittances.
This story is from the August 13, 2022 edition of Businessworld India.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 8,500+ magazines and newspapers.
Already a subscriber ? Sign In
This story is from the August 13, 2022 edition of Businessworld India.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 8,500+ magazines and newspapers.
Already a subscriber? Sign In
Powerful, Peculiar Perquisites
MOST COMPANIES recognise that people are key to their success. Competition is all about the war for talent. Higher compensations can, in many cases, attract that brilliant leader or the tech genius, but a competitor may well offer even more. This race is financially draining and not really a great strategy.
Shaping The Future Of India's Infrastructure
RUPEN PATEL on the achievements of the engineering and construction major including the iconic projects rendered by it, nation building, focus on sustainable practices and much more
WHY DON'T WE SUE BRITAIN?
I WAS WORKING ON my next column for BW – on one of my favourite themes like ‘Sustainability’, ‘Inclusivity’, ‘India Shining’ etc.
LIFE AND TIMES OF A MEDIA TITAN
DD Purkayastha's autobiography captures his 42-year tryst with the ABP Group, delving into various aspects of his professional and personal experiences, as well as insights into the factors that have shaped his character and career trajectory
THE SONET STRIKES BACK
The sub-4-metre SUV segment in India has been a battlefield for automakers, each vying for supremacy with their unique propositions. With the launch of 2024 Kia Sonet, the South Korean automaker is sharpening its edges in this competitive market
SLEEK, SUBTLE, COMPACT AND EASY TO CARRY
The HP Omen Transcend 14 targets a niche market that is growing day by day. Statistically, never in history, was there a better time to launch a gaming laptop, says Deep Majumdar
Geopolitical Resilience for Indian Companies
It's in crisis that inventiveness is born, as well as discoveries made and great strategies arise. He who overcomes crisis, overcomes himself, without getting overcome. - Albert Einstein
The Sourav Ganguly Era
Lessons in Leadership from Indian Cricket - 2
Leadership Challenges Were Not This Long, Before
LEADING IN TODAY’S dynamic environment presents unprecedented challenges. The list of challenges is never-ending. They include navigating complex decisions, staying resilient, inspiring teams, staying innovative, and continually adapting to the constantly changing ecosystem.
The Supreme Court Emerges as a Net Zero Polestar
'Dharma exists for the welfare of all beings. Hence, that by which the welfare of all living beings is sustained, that for sure is dharma,' - Mahabharata (Shanti Parva 109.10)