If macroeconomic indicators are anything to go by, Indian economy seems to be back on the recovery path. The trade deficit for the period 2013-14 has come down significantly. Currently, it stands at a three year low of US$ 138.6 bn. The trade deficit has shrunk, thanks to a series of import cuts. Overall imports are down by 8% YoY, led by 40% drop in gold and silver imports.
However, before one feels too good about the data, here are some other facts to take note of. The first is that India has failed to meet the export target in FY14. In the month of March, exports were down for the second month in a row and trade deficit touched a five month high. Until some time back, when everyone was crying over falling rupee, exporters were having a good time. Now with rupee showing some recovery with respect to other currencies and slowdown in manufacturing and weak credit conditions, exports are taking a hit.
The Government has been able to restrict, trade deficit thanks to unconventional measures like hike in excise duty for the yellow metal. However, the signs of a slowdown are hard to ignore. The economy is still surrounded by dark clouds. In short, what we are witnessing seems far from a sustainable recovery.
No comments:
Post a Comment