A study on negative trade balance in India and its impact on Indian economic

 

Dr. Ashish Dubey

Assistant Professor, Vivekanand Mahavidyalaya, Raipur

 

ABSTRACT:

This paper analyse the impact of trade policy reforms in India and its negative balance. Before the end of 20^th century the world wide defilation has affected the market, employment and income of all stable economy. All economy applied too many policies to control it, but they are failure. The economic theories explain that inflection and defilation is a part of economic function and for the growth it is essential to control it. We tried to find out, how Indian economy is successful to control the world wide defilation for their world trade.

 

KEYWORDS: Indian economy, trade, trade balance

 

INTRODUCTION:

After completing 25 years of trade globalization policy in Indian-economy, here it is required to analysis its impacts on various sectors of  Indian-economy and make changes on those policies to get better on those sectors.

 

On general observation it is found that the impacts of those policies are not as per requirement. In the initial stage these policy are quickly raising our fund of foreign currency and also create new sectors of employment and services which helped us to make a new signature in world economy, but at present our economy suffers by many obligations which are implemented for us by various international trade organisations and these things are highly affecting our various economic field, and due to its causes economic employment is decreasing, foreign currency fund are reduced and also our economy formed negative balance in world trade.

 

OBJECTIVES:

The basic objectives of this study is to find out the major causes of negative balance on Indian economy and also how it is effecting the various sectors of economy.

 

FOREIGN TRADE

Foreign trade affects the domestic trade of Indian market and other countries too. After globalization, the impact of foreign trade has increasing in India. The causes are- quantity of global bond are increasing after globalization after 1991 India is following global socialist democratic approach which added foreign countries for trading purpose.

 

 

 

For the year 2015-20 the govt of India have framed new foreign trade policies in the period 2009-14 the previous trade policy is completed its time. At present India is the 19^th largest export and 10^th largest importer in the world.

 

 

On a per capita income basic India ranked 140^th by nominal GDP and 129^th by GDP (PPP) in 20011

Economic growth rate stood at around 6.5% for the year 2011-12 fiscal years.

 

For the duration of 2009-15 we have added 26 new markets and achieving the growth target in export 15% for the 1 ^st two years.

 

The other aims of the policy are to double India export of goods and services by 2014 and to double Indians’ share in global merchandise trade by 2020.

 

Trade Policy

For the fulfilment of above study we can make changes in our present foreign trade policies and try to make more effective for improvement and participation in global market in Indian economy.

 

To make easy taxation policies notified goods under MEIS (Merchandise Exports from India Scheme) and making easy taxation policies for those goods those are registered in MEIS.

 

For the increase of participation of service sector in marking policies says SEIS (Services Exports from India Scheme).

 

Exported services which are rewarded under SEIS are getting additional benefits and rewards under this act both policies are part of SEZ (Special Economic Zone) which are established for the purpose of increasing of export from India.

 

Services and goods which are registered under those schemes are getting many relaxation for export activities provided by Indian govt a part of it another policies is to improve the domestic traditional production by traditional process and provides facilities to create global market for them.

 

In the process of export activities traders are trying to reduce the paper activities and improve it by processing it by on-line, which will save the time and remove hurdles in trade process. For the smooth procedure of import and export make a planning of e-govt which will save the time and also spread the area of international trade in India.

 

For the purpose of spread of export from our country, market has been classified into global market in various categories:-

 

Categories A- Traditional Market 30

Categories B – Emerging and focus market 139

Categories C- As other markets 70

 

METHODOLOGY:

This study is based on secondary data.

 

Analysis:-

Table 1: Import and Export of India during August 2014-15

(Amount is in 100 million Dollars)

Export		Import
August 2014	26.80	August 2014	37.47
August 2015	21.27	August 2015	33.74
Difference in %	-20.66%	Difference in %	-9.95%

Source- Patrika daily news paper dated 29/9/15 Pg-8

 

The data shows in the above table gives the details of import and export of India during August 2014-15. The export and import of our economy has reduced and reduction in export is higher than the import and it is not a positive growth for our economy, the basic causes for the reduction in export is reducing the prices of crude oil it is reduced to 42.6% in import of petroleum product.7.01% increase in the import of non-petroleum product, in this duration negative trade balance has increased, it is increased from 10.67 (100 million dollars) to 12.48 100 million dollars).  In our total import 14.69 % is a part of gold import and which is not used for the capital formation.

 

The data of 2015-16 shown up to Sept 2015, our total export is approximately 560878 corer dollars and import is approximately 855993 corer dollars , here  around  15.26%  is negative trade balance found in the international trade, which increased our fiscal loss.

 

Increasing prices of essential agriculture products and reduction of agriculture production is increasing the negative trade balance in India in international trade market and it is the biggest challenge for our economy. This cause also effect the home market of India and it is also face the deflation condition, to control it too many tools are used by RBI and controlling authority by using to reduce the interest, but as per my opinion it is not permanent solution to control their conditions. For it, is required to generate the additional employment opportunity which will increase the income of citizens and create stable demand in economy.

 

The present study show negative trade balance also affect by the condition of home market, interest and employment status of economy and dependency only on international trade is highly harmful for any economy and it is  the result of our liberation policies, which is completed the duration of 25 years. If we don’t improve our home market, we step up towards economy staginess’.

 

CONCLUSION:

All the measures which are used before the 20^th century to control the negative trade balance were failure to control it. Dependency on foreign market is harmful for our country’s economy here it is important to make a strong domestic market and produce domestic products to fulfil the requirement of internal economy and make it also possible for export. “Make in India” is a developing concept to develop the international market and technology for establishment in international market and result of it is awaited.  Our economy is continuously showing negative trade balance after independency before globalization policy. It was controlled by defilation budget and foreign loans. This is damaged basic financial infrastructure of Indian economy here the borrowing burden is highly increasing and international financial institution are refused to support us continuously to control it. Globalization policy adopted by us, invited foreign capitals for capital formation directly and after completion of 25 years yet it is beyond control and every time we try to stable it in our economy. This is continuously making negative trade balance in India, now it is required that we have a stable and strong domestic market, technology and supported policy to stable our country in global market.

 

REFERENCES

Source- Patrika Date- 29/9/2015

www.slideshare.net/shikhagupta31/Indiantrade  accessed on 3/10/15

http://dfat.gov.au/trade/Pages/trade-and-investment.aspx  accessed  on 5/10/15

http://www.saylor.org/site/textbooks/International%20Trade%20-%20Theory%20and%20Policy.pdf  accessed on 5/10/15

http://internationalecon.com/Trade/T-toc.php  accessed on 5/10/15