Trade balance: Getting a grip - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks


Login Failure
(Please do not use this option on a public machine)
  Sign Up | Forgot Password?  

Trade balance: Getting a grip

Dec 1, 2000

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

These Stocks Have Rallied Over 300% In the Last 12 Months. Is the Rally Justified? (Views On News)

Nov 12, 2021

As many as 150 stocks from the BSE 500 index deliver multibagger returns in the past one year.

Ultimate Guide to Hedging Your Portfolio (Fast Profits Daily)

Sep 21, 2021

How can you protect your portfolio in a market crash? Find out in this video.

Ride the Indian Real Estate Revival with this 'Different' Smallcap Stock (Profit Hunter)

Mar 23, 2021

Affordability in the housing segment has never been so good in last one and a half decade. Here's how you could make the most of it...

My Latest Stock Recommendation (Fast Profits Daily)

Oct 9, 2020

How I picked an exciting stock using trends from both the commodity and equity markets.

Data is the New Oil but It's Also the New Sugar. Here's How to Fight it (Profit Hunter)

Jun 1, 2020

Is too much data hurting your quest for market beating returns?

More Views on News

Most Popular

Infosys vs TCS: Which is Better? (Views On News)

Nov 26, 2021

In the post pandemic era, the top two IT companies in India are fighting to capture the growing demand for IT.

This Multibagger Stock Zooms 20% After Dolly Khanna Buys Stake (Views On News)

Nov 24, 2021

Shares of this edible oil company zoomed over 50% in three days after ace investor bought around 1% stake.

6 Popular Stocks that Turned into Penny Stocks (Views On News)

Nov 27, 2021

A look at popular stocks that crashed big time and never recovered, i.e. which went from 'Multibaggers to Multibeggers'.

How to Find Your Next 10-Bagger in this Market (Profit Hunter)

Nov 19, 2021

The #1 make or break factor in your portfolio you shouldn't ignore.

MobiKwik IPO Opens for Subscription Soon. Key Things to Know Before Subscribing. (Views On News)

Nov 20, 2021

The Rs 19 bn issue is set to hit the market soon.


Become A Smarter Investor
In Just 5 Minutes

Multibagger Stock Guide 2022
Get our special report Multibagger Stocks Guide (2022 Edition) Now!
We will never sell or rent your email id.
Please read our Terms