The article talks about the 0.8% rise in export levels of India in January 2013 , this rise was seen after a straight eight month decline. The imports increased by 6.1 % , the trade deficit has further widened to about $ 20 Billion in January .
The current account deficit is set to be at $87.9 billion which is 4.7 % of the country's GDP against the 4% or the $76 which was expected earlier. The regional bank of India is comfortable with the CAD in the range of 2.5-3 % but seeing this gap widen , policymakers are under pressure to boost the FDI to prevent the steep depreciation in the Indian rupee.
The government hopes that this increase in levels of export would help the situation but think that it is only marginal , and it should help narrow the trade gap at the end of the fiscal. The government has also offered sops to boost shipments from the country.
http://timesofindia.indiatimes.com/business/india-business/Exports-rise-snap-8-month-fall/articleshow/18491493.cms
The current account deficit is set to be at $87.9 billion which is 4.7 % of the country's GDP against the 4% or the $76 which was expected earlier. The regional bank of India is comfortable with the CAD in the range of 2.5-3 % but seeing this gap widen , policymakers are under pressure to boost the FDI to prevent the steep depreciation in the Indian rupee.
The government hopes that this increase in levels of export would help the situation but think that it is only marginal , and it should help narrow the trade gap at the end of the fiscal. The government has also offered sops to boost shipments from the country.
http://timesofindia.indiatimes.com/business/india-business/Exports-rise-snap-8-month-fall/articleshow/18491493.cms
This increase is significant enough to mention and keep an eye on but until it rises more I don't see any need for much Government intervention. Conversely, if the deficit continues to widen I do see Government intervention in India's trade as a favorable action.
ReplyDeleteThe rise in exports is certainly a good sign, not necessarily because of the marginal increase in exports and more because they stopped declining. While the widening current account deficit is a matter of concern, it's probably too early for drastic government intervention. If exports begin to fall again, while imports rise, then it may be time for the government to consider enacting a policy to close the CAD.
ReplyDeleteBoosting FDI and loosening restrictions is definitely a good idea though, since the country does not want to experience a sharp depreciation of the Rupee.
Absolutely true , government intervention is not required just yet but could be in the future if the deficit keeps growing.
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