Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.

Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Trade balance: Getting a grip - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • Dec 1, 2000

    Trade balance: Getting a grip

    The news on the domestic front may not be all that encouraging. Indeed, growth in industrial production slumped from a high of 11.8% in February to 4.8% in August 2000. The trade balance on the other hand dipped to US$ 300 m in September as compared to US$ 1.1 bn in April.

    One of the primary reasons for the improvement in the external accounts is the high growth recorded by exports over the last few months. Growth in imports on the other hand has slowed down considerably. This is largely due to the waning of the year on year impact of high crude prices and the decline in imports of capital goods. Consequently, in the month of September, there was a year on year decline in trade deficit.

    (USD bn) Apr-00 May-00 Jun-00 Jul-00 Aug-00 Sep-00
    Exports 3.4 3.5 3.3 3.6 3.6 3.9
    (YoY change) 30.3 30.5 27.8 16.6 17.7 25.0
    Imports 4.5 4.5 4.1 4.3 4.1 4.2
      43.9 31.7 13.5 20.2 7.1 5.0
    Trade Balance (1.1) (1.0) (0.8) (0.7) (0.5) (0.3)
      112.2 36.0 (22.6) 41.6 (33.6) (66.2)

    The growth in exports will bring much-needed succor to the domestic industry, which has been reeling under the pressure of cheap imports and slackening demand in domestic markets. The decline in the trade deficit, meanwhile, will bring solace to the forex markets, which have witnessed high volatility in recent months.

    The current account balance, which includes the trade balance and the imports and exports of services, too, will show an improvement. This is so because the export revenues from India's highflying software sector (estimated to be in range of US$ 6 bn for the current year) are categorized as services.

    However, concerns arise when one considers the capital account. FII inflows have been erratic in recent months. Indeed in October there was a net outflow of Rs 2.7 bn. FDI, on the other hand, continues to grow, but at a rate much slower than what was targeted.

    India surely seems to have got a grip over the trade deficit. However, with the equally important capital account showing erratic trends, there is no place for complacency.



    Equitymaster requests your view! Post a comment on "Trade balance: Getting a grip". Click here!


    More Views on News

    Insider Leaks Equitymaster Stock Picks (The 5 Minute Wrapup)

    Jul 25, 2017

    Equitymaster HQ has been infiltrated. Valuable stock ideas have been leaked. Who's responsible?

    Raymond and Other 'For Profit' Companies Who Don't Care about Shareholder Returns (The 5 Minute Wrapup)

    May 27, 2017

    What happens when minority shareholders are short-changed in the normal course of business?

    Why Commission Driven Model In Mutual Funds Should Be Eliminated... (Outside View)

    Feb 15, 2017

    PersonalFN believes SEBI has taken a step back-apparently in the admission of it going overboard with the regulations.

    This Book Changed How I Looked at the World of Man and Money (Vivek Kaul's Diary)

    Aug 24, 2016

    And here's your chance to claim a free copy of this book...

    The Developed World is Dying because of Demographics, Debt, and Deflation (Vivek Kaul's Diary)

    Aug 12, 2016

    And Why India's demographic dividend could turn out to be a doubtful debt...

    More Views on News

    Most Popular

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    The Most Profitable Investment in the History of the World(Vivek Kaul's Diary)

    Aug 8, 2017

    'Yes, it looks like a bubble. And, yes, it's like buying a lottery ticket. But there's something happening that has never happened before. It's an evolutionary leap in money itself.'

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    Bitcoin Continues Stellar Rise(Chart Of The Day)

    Aug 10, 2017

    Bitcoin hits an all-time high, is there more upside left?

    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms