India's trade deficit
Topic: India's International Trade and Tourism · NCERT: Class 12, Ch 8 "International Trade"
Meaning
A trade deficit means a country's imports are worth more than its exports. India has run a trade deficit in every year of the Class 12 data. It grew from ₹1.26 lakh crore in 2004-05 to ₹14.26 lakh crore in 2021-22 (verify current). The main causes are imports of crude oil, gold, electronics and coal. Services exports and remittances (money sent home by Indians working abroad) cover part of the gap. Class 10 calls this an unfavourable balance of trade.
Example
Fuel (coal and petroleum) made up 31.6% of India's imports in 2021-22. Petroleum imports alone were worth ₹12.08 lakh crore that year, the largest single item behind the deficit.
Don't confuse with
- Balance of payments: this counts all money flows, including services and remittances. The trade deficit counts only goods, so it can be large even when services earnings help the overall position.