"Those who in quarrels interpose, must often wipe a bloody
nose."
—John Gay (American, 1685-1732)
Word for the day
Fizgig (n)
A type of firework that
makes a loud hissing sound.
Malice towards none
Is Arun Jaitely batting for
dilution of "Prevention of Corruption Act", or just suggesting some
corrective amendments?
First random thought this morning
The world is anticipating serious trade disruption, that may
potentially lead to a recession. It that does happen, emerging markets will be
badly affected. In spite of whatever,
NITI Aayog and other experts feel, India may not be insulated from a global
contagion.
Domestic situation not looking great either. Fiscal management
requires day to day monitoring. CAD is expanding. INR and yields conditions
worsening.
Amidst all this, no one knows who is FM of the country. The
Finance Ministry website says, its AJ
whereas people believe its PGl!
Managing trade balance
India imported over US$444bn worth
of goods in 2017, i.e., a per capita import of appx Rs24,000. This is about 22%
of annual per capita income.
Exports from India during the same
year totaled US$298bn. i.e. per capita exports of Rs16,000. This is about 14%
of annual per capita income
In past more than one decade, the
share of India in overall global trade has been mostly stagnant below 2.5%, a
rather unacceptable number for the third largest global economy in PPP terms.
Since 2011, exports have remained close to US$300bn, briefly falling to
~US$265bn during 2015 and 2016.
India imports ~58% of its
requirements from Asian trade partners. EU at ~18% and North America at ~8% are
other major trade partners of India.
Traditionally, energy and precious
metals & diamonds constituted a dominant part of India's import basket. But
in recent years, electronics (phones, TV, solar panels, & computer parts etc.)
have become significant part of India's import basket.
As per a Bloomberg report (see here) "The relentless rise in purchases of
smartphones, TVs and other goods have made electronics India’s second-biggest
import item after oil, and is pushing the nation’s trade deficit wider.
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There are five challenges before
the government, in my view—
(a) To increase the domestic production of energy and electronic
products to substitute import.
(b) To make Indian exports more competitive.
(c) To increase share of India in global trade to a respectable level
(as per the government targets 5%).
(d) To diversify trade to non-traditional areas.
(e) To maintain trade balance with most trade partners.
I would like to share my random
thoughts of these five challenges in next few posts.
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