15th June 2024 (10 Topics)
1
Jun
3
Jun
4
Jun
5
Jun
6
Jun
7
Jun
8
Jun
10
Jun
11
Jun
12
Jun
13
Jun
14
Jun
15
Jun
17
Jun
18
Jun
19
Jun
20
Jun
21
Jun
22
Jun
24
Jun
25
Jun
26
Jun
27
Jun
28
Jun
29
Jun
India Trade Deficit Widens
Context
India’s merchandise trade deficit widened to a seven-month high in May, driven largely by a surge in imports, according to official data released by the commerce ministry.
What is Trade Deficit?
- Trade deficit refers to a scenario in international trade where a country's expenditures on imports exceed its earnings from exports. It is also termed as a negative balance of trade.
- Components of Trade Deficit Calculation: The calculation of trade deficit encompasses various transactions in international trade:
- Goods and Services: Includes imports and exports of physical goods and intangible services.
- Capital Account Transactions: Involves asset transfers like trademark rights or mining rights.
- Current Account Transactions: Encompasses primary income (e.g., dividends, interest, remittances) and secondary income (e.g., private remittances, pension payments).
- Impact of Trade Deficit: Trade deficit affects a country's balance of payments, reflecting all international transactions. It indicates the economic health concerning global interactions.
- Consumption Patterns: Reflects residents' ability to purchase more goods than produced domestically.
- Capital Account: Indicates foreign currency financing through loans and investments.
Advantages and Disadvantages of Trade Deficit
- Advantages:
- Availability of Goods: Ensures ample supply of imported goods for domestic consumption.
- Disadvantages
- External Payments Pressure: Puts strain on a country's external financial obligations.
- Currency Pressure: Affects the stability and value of the country's currency.
Government Response: Governments may adjust import-export policies, impose tariffs, or encourage domestic production and exports.
Courses
Study
Notes
Home
Resources
More
