Trade data for December paints an optimistic picture. Exports seem to be increasing, and in the last month of 2010 touched a 33-month high at $22.5 billion. At the same time, the trade deficit seems to be narrowing, and in December it stood at $2.6 billion.
This has led to optimism even in the face of a hard current account deficit situation. Commerce secretary Rahul Khullar said the country may end up with a balance of trade in the range of $118-120 billion instead of the expected $130 billion.
There is, however, too much that is iffy here: Crude oil prices are shooting up and adverse exchange rate movements cannot be ruled out. In any case, one twist in the trade deficit key has to be made in New Delhi: Unless oil prices are deregulated and oil demand managed better, the best-laid trade plans may not be realized.