Trade deficit declines to 106.8 billion US dollars in April-January 2015-16 from 119.6 billion US dollars in corresponding period 2014-15

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Current Account Deficit (CAD) limits at 1.4 percent of Gross Domestic Product during April-September, 2015-16

 

Foreign Exchange Reserves stand at 351.5 billion US dollars as on 5th February, 2016

 

  

            The Economic Survey 2015-16 presented to the Parliament today by the Finance Minister Shri Arun Jately testifies a strong macroeconomic outlook for the country.  The Survey shows that a pick-up in growth in some large advanced economies along with lower global commodity prices and relative financial stability amidst periodic turbulence marked the external sector environment in 2015-16.  The Survey says that during the current financial year (April-January), the growth in India’s exports declined year on year by 17.6% and they stood at 217.7 billion US dollars.  The imports have also declined by 15.5% in the current financial year (April-January) to 324.5 billion US dollars.  Lower levels of Petroleum Oil Lubricants (POL) imports were the main reason for the decline in total imports this year so far.  As a result, during 2015-16 (April-January) trade deficit decreased to 106.8 billion US dollars as compared to 119.6 billion US dollars in the corresponding period of 2014-15.

 

 

The Economic Survey further says that while exports slow down may continue for a while before picking up in the next fiscal, continuance of low commodity prices globally augurs well for sustaining low trade and current account deficit.  As a portion of GDP, the Current Account Deficit (CAD) is likely to be in the low range of One to One Point Five percent.  Moderate growth in the invisibles surplus, coupled with lower trade deficit, resulted in lower CAD of  US $ 26.8 billion (1.3 per cent of GDP) in  2014-15 and US $ 14.4 billion (1.4 per cent of GDP) in H1 of 2015-16.

 

India’s Balance of Payments (BoP) position remained comfortable during the first half of 2015-16.  Low levels of CAD coupled with moderate rise in capital inflows resulted in rise in foreign exchange reserves of 10.6 billion US dollars in first half of 2015-16.  India’s foreign exchange reserves at 351.5 billion US dollars as on 5th February, 2016 mainly comprised foreign currency assets equal to 328.4 billion US dollars (93.4% of the total) and Gold at 17.7 billion US dollars.  With increase in reserves in 2015-16 (H1), all traditional reserve-based external sector vulnerability indicators have improved.  The reserves cover for imports increased from 8.9 months at end-March 2015 to 9.8 months at end-September 2015.

 

During 2015-16 (April-January), the average exchange rate of the rupee depreciated to Rs. 65.04 per US dollar as compared to Rs. 60.92 per US dollar in 2014-15 (April- January).

 

India’s external debt has remained in safe limits as shown by the external debt to GDP ratio of 23.7% and debt service ratio of 7.5% in 2014-15.  The prudent external debt policy of the Government of India has resulted in external debt remaining within safe and comfortable limits and in containing its rise.

 

 

 

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