India's merchandise exports plunged to $34.71 billion in August from $38.28 billion in August last year, while imports touched a record high of $64.36 billion, as it surged from $62.30 billion in August 2023.
India's trade deficit widened to $29.65 billion on an annual basis in August, which previously stood at $24.2 billion in the same month last year, revealed the data released by the Ministry of Commerce on Tuesday. In July, the trade deficit was $23.50 billion. However, Sunil Barthwal, Secretary, the Department of Commerce assured that there is no reason to be concerned about the growing trade deficit as this is a common phenomenon for a fast-growing economy.
India's merchandise exports plunged to $34.71 billion in August from $38.28 billion in August last year. On the other hand, imports touched a record high of $64.36 billion, as it surged from $62.30 billion in August 2023, as per the recent official data. Citing the example of China, the Commerce Secretary pointed out that when China was at a faster growth trajectory, its trade deficit was highest. According to him, it is misleading to compare the trade deficit of an emerging economy with the developed economies.
“ Trade deficit is never a matter of concern for emerging economies. At one point of time when China was growing they maintained the largest trade deficit. They were also exporting but if you look at the commodity market, they were all purchasing. There was a huge consumption demand which is coming from an economy, which is growing at a rate double the rate at which the global economy is growing,” said Barthwal while addressing the media.
Officials from the Ministry of Commerce highlighted that as the economy grows much faster and becomes a part of the global value chains, the country has to import certain things to export.
“If you are growing at a very high rate, double the rate at which the world is growing, you also require huge imports, to the extent that there is no furnishing issue. These are perfectly normal," added Barthwal.
India’s real GDP is projected to grow between 6.5–7 per cent in 2024-25 as per the Economic Survey 2023-24 presented in Parliament in July by the Finance Minister, Nirmala Sitharaman. However, global growth is projected to be in line with the April 2024 World Economic Outlook (WEO) forecast, at 3.2 per cent in 2024 and 3.3 per cent in 2025.