Tackle the inflows

An issue that has attracted surprisingly little notice is the size and growth of the trade deficit. Even more worrisome is the flat trajectory for exports — which escapes notice because comparisons are with the corresponding month of a year earlier. But if one looks at the variations month-on-month, the loss of all momentum becomes obvious because exports from April to August have stayed constant at about $16 billion. Even the usual seasonal upswing after the summer slump is missing. In contrast, imports have been growing (hitting $29 billion in August), and the trade deficit, therefore, has grown from $10 billion in April to $13 billion in August — which makes for 30 per cent growth in four months. The full year could register a trade deficit of $150 billion. At 10 per cent of GDP, that would be the largest trade deficit in recent Indian history, and also the largest for any significant economy in the world.