India's trade deficit is world's third largest

India's trade deficit is world's third largest

Harish Damodaran
Arun S.
New Delhi, Oct. 21


India has the world's third largest merchandise trade deficit after the US and the UK, according to data from the World Trade Organisation's just-released International Trade Statistics 2010.
In 2009, the country's trade deficit – arising from its import of goods being more than its exports – amounted to $87 billion, against $549 billion for the US and $129 billion for the UK.
The Commerce Ministry has projected India's trade gap to touch $135 billion during 2010-11, though this figure pertains to the fiscal year ended March 31, 2011, whereas the WTO data is based on calendar year.
If the $135 billion projection holds for the calendar year as well and there is no change to the UK's $129 billion number – both not wholly unrealistic assumptions – India's trade deficit would end up being next only to the US.
The country's $87-billion deficit in 2009 is, incidentally, lower than the record $126 billion for the previous calendar year. That year saw India occupying the No. 4 position, behind the US ($882 billion), the UK ($173 billion) and Spain ($139 billion). But since then, India has overtaken Spain, which registered a much bigger contraction in foreign trade on account of the global economic downturn.
The impact of the downturn can be seen from the accompanying table, with every major economy experiencing a decline in both exports and imports in 2009.
The end-result has been a reduction in trade surpluses (of countries such as China, Germany, Saudi Arabia and Russia) as well as trade deficits (of the US, the UK, Spain and India).
In 2009, India ranked 21st among the world's exporters of goods, while being 14 {+t} {+h} in imports. The picture was, however, different in services, where the country was placed at No. 12 in exports. At $87.43 billion, its exports were higher than imports of $79.77 billion, thereby translating into a $7.66 billion surplus on this account.
Moreover, the WTO's $87.43 billion estimate covers only ‘commercial services'. They do not include private remittances, which stood at $53.90 billion for the fiscal ended March 31, 2009. If this figure – representing export of ‘manpower' – is added, India's services exports would cross $140 billion. That would push it closer to the US ($474 billion), the UK ($233 billion), Germany ($227 billion) and France ($143 billion), though these, it may be noted, exclude private transfers.
Pasted from <http://www.thehindubusinessline.com/2010/10/22/stories/2010102253260400.htm>