How an uncertain economy is driving India to a crisis
The Indian economy is still uncertain. For example, the performance of the industrial sector (use-based) in the case of consumer durables went down from 3.4 per cent in 2015-16 to 2.9 per cent in 2016-17. On the other hand, the Consumer Price Index (CPI) inflation went up from 3.9 per cent in March 2017 to 4.3 per cent in March 2018.
There has been a systemic rise in the foreign trade deficit from $10.7 billion in March 2017 to an increased deficit of $13.7 billion in March 2018.
Cumulative exports rose by 9.8 per cent to $302.8 billion, and imports by 20 per cent to $459.7 billion during the financial year 2017-18 compared to $275.9 billion and $3.84 billion, respectively, in the corresponding period last year.
So relative to the last financial year, the foreign trade deficit has increased by about 30 per cent. The rise of imports has continued to increase by 7.2 per cent in March 2018. In the financial year 2017-18, imports rose a whopping 20 per cent. The yawning gap between imports and exports in which the former is significantly lower, with a current trade deficit of $13.7 billion, clearly shows that India has continued to increase imports compared with exports. In other words, India is living beyond its means because of relatively high imports and substantially lower exports.
This is bound to have an inflationary impact on the Indian economy. This at a time when the cost of each barrel of oil is $75. The media has played down these worrying trends in the domestic and international sectors of the Indian economy.
When the economy is suffering both inflation and high foreign trade deficit as well, it is bad news for the economy.
Under this situation poor, who use kerosene for cooking, will suffer and so will farmers who use diesel for water pumping machines or running tractors.
A crisis is in the making. The government should concentrate on the economy along with spending time on campaigning. The government must not forget the famous saying, "It's the economy, stupid."