The rising non-oil deficit
While the high price of oil is certainly the villain here, let’s not lose sight of the rise in other imports, especially imports of electronic goods
India’s trade deficit widened to a five-year high in June, due to high crude oil prices. But while the high price of oil is certainly the villain here, let’s not lose sight of the rise in other imports, especially imports of electronic goods. The accompanying chart shows the non-oil, non-gold deficit, or non-oil exports minus non-oil and non-gold imports, has been moving up in recent months.
Note that we had a surplus on this metric in early 2014, as the chart shows. With the economy improving and once investment demand revives, imports of project goods will increase this deficit.
That underscores the importance of increasing exports, but unfortunately, given the rise of protectionism, that’s easier said than done.Reserve Bank of India has recently drawn attention to the deterioration in state finances. The spectre of twin deficits is once again hovering on the horizon.
Editor's Picks »
- At opposition meet, Rahul Gandhi targets govt over Rafale deal
- News in numbers: Trump’s attacks on the press ‘dangerous to the lifeblood of democracy’, says NYT
- Former Religare CEO Shachindra Nath raises about ₹1,000 crore for NBFC
- PE industry lobbies CCI for anti-trust exemptions
- Opinion | Turkey flashes warning sign to Asia
- Recent rise in trade deficit is not due to the oil prices
- Safeguard duty proposal has deepened uncertainty in the solar energy sector
- Fortis Healthcare: What now, after IHH entry and June quarter loss?
- Weak Q1 for Amara Raja but investors pin hopes on softening lead prices
- IDBI Bank Q1 results show how expensive it is for LIC