9.9. Trade Deficit in India

♤ India’s trade deficit has increased from US $ 28 billion in 2004-05 to all time highest US $ 195 billion in 2012-13.

♤ Since then, the trade deficit has consistently declined (the trade deficit from April-March 2016-17 was estimated at US $ 105.72 billion) due to the decline in the value of Petroleum, Oil and Lubricants (POL) imports, caused by a fall in international oil prices.

o Trade deficit can be decomposed into POL deficit and non-POL deficit. POL deficit (POL exports minus POL imports), the major component of trade deficit, which was hovering at around US$100 billion from 2011-12 to 2013-14, declined to US$ 81.5 billion in 2014- 15 and to US$ 52.5 billion in 2015-16.

♤ Trade policy has focused on promoting exports and thereby moderates the levels of trade deficit. The moderation in the levels of trade deficit had a salutary effect on sustaining the moderation in the overall balance-of-payments outcome in the current fiscal.