Mind that trade gap
PremiumWhile the Reserve Bank of India has the rupee’s back, with jerky drops held off by its war chest of foreign exchange, uncertainty still prevails over how the world trade scenario will unfold
India’s latest trade figures are a mixed bagtrade gap in August climbed 1.6% from a year earlier to $33.92 billion, according to government data. This points to a cool-off in overseas demand as much of the rich world grapples with tightening financial conditions in the wake of an inflation surge. Still, a flat export figure for the month is a relief in the context of today’s gloom over global shipments. Our April-August exports were up 17.7% over last year’s to $193.5 billion, but India’s import bill shot up too after war broke out in Europe. August imports leapt 37.3% to $61.9 billion. Our trade deficit, at almost $28 billion last month compared with August 2021’s $11.7 billion, is far from comfortable, especially since the balance of capital inflows and outflows is yet to regain its relative stability, even if this year’s volatility on this front has reduced as stock markets attract foreign investors again. While the Reserve Bank of India has the rupee’s back, with jerky drops held off by its war chest of foreign exchange, uncertainty still prevails over how the world trade scenario will unfold. We have few precedents to go by, as the West faces big challenges that can’t be tackled without impacting other economies
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