India’s trade deficit increases 22-fold post economic reforms in nineties

India’s imports have grown over 18 times in the last two decades, partly due to growing reliance on oil The Dollar Business

India is targeting a growth of 8% in merchandise exports to $340 billion in FY2014-15

Measures taken by the Indian government to open its markets as a part of economic liberalisation in the early nineties have led to a massive growth in overall trade, but the trade deficit has widened more rapidly than overall trade growth in the last 20 years. According to the Ministry of Commerce, India’s merchandise trade stood at around $42 billion in FY1990-91, and has grown to around $765 billion in FY2013-14. Nirmala Sitharaman, Minister of Commerce, informed the Parliament last week that India’s trade has grown at an annual average growth rate of 13.42% and has increased 18-fold since 1990-91. However, India’s trade deficit has grown more rapidly, by around 22-fold during the same period, from around $6 billion FY1990-91 to $136 billion in FY2013-14. According to the Ministry of Commerce, India’s exports stood at around $18 billion in FY1990-91, but has grown to around $314.5 billion in FY2013-14. In the same time, India’s imports have grown from around $24 billion to $450.5 billion. The Commerce Minister said that the figures reflect changing macroeconomic factors of India and the world, such as demand and supply, exchange rates, and economic conditions of different countries. India’s trade balance is also heavily dependent on oil and gold imports. According to the Ministry of Commerce, India had a trade surplus with countries such as USSR, Hong Kong, Bangladesh, Thailand, Sri Lanka, Egypt, Mauritius, Spain, Afghanistan, and Nigeria in 1990-91. However, it now runs a deficit with Russia and Nigeria, and has a trade surplus with countries such as USA, Singapore, Bangladesh, Hong Kong, Netherlands, Sri Lanka, UK, Kenya, Nepal, and Vietnam.

This article was published on December 23, 2014.

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The Dollar Business Bureau - Dec 23, 2014 09:49 IST

India’s trade deficit increases 22-fold post economic reforms in nineties

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