Hindi English Translation || Editorial || ​High base effect: On a shrinking trade deficit, rising exports

​High base effect: On a shrinking trade deficit, rising exports

A shrinking trade deficit, as seen in February, is no cause for cheer

India’s goods trade in February saw its steepest (Rising or falling sharply; very high in price or amount) decline in nearly two years. Exports fell by 10.9% to $36.91 billion, while imports dropped 16.3% to $50.96 billion, resulting in the smallest trade deficit in over three years (42 months) at $14 billion. While a shrinking (सिकुड़ना, घट जाना) trade deficit (घाटा, कमी) driven by rising exports would have been a positive development, the simultaneous decline in exports and imports is a cause for concern. Experts partly attribute this narrowing (संकीर्ण, सीमित) deficit to a high base effect, as exports in February last year, a leap year, stood at $41.4 billion and imports at $60.92 billion. However, exporters also report a trend of American importers holding back on orders, fearing the reciprocal (पारस्परिक) tariffs set to take effect on April 2, as announced by U.S. President Donald Trump on February 13. This announcement came just before his meeting with Prime Minister Narendra Modi, where they unveiled an ambitious plan to boost bilateral trade to $500 billion by 2030 and finalise a free trade agreement (BTA) in the months ahead. Despite Commerce Minister Piyush Goyal’s diplomatic outreach (पहुंच, संपर्क अभियान) to U.S. Commerce Secretary Howard Lutnick this month, discussions yielded little beyond a commitment to continue BTA negotiations (समझौता वार्ता, बातचीत). The looming threat of reciprocal tariffs has unsettled Indian exporters, as the U.S. is India’s second-largest trading partner, accounting for $118.3 billion in trade last fiscal year. It is also the only country among India’s top five trading partners with which India enjoys a trade surplus (अतिरिक्त, अधिशेष).

Imports also declined sharply, led by a 62% plunge (To fall or drop suddenly and deeply) in gold imports compared to last February. This drop is linked to domestic gold prices surging to ₹87,886 per 10 grams last week, dampening (कम करना, नम करना) consumer demand. Oil imports also fell nearly 30% as India diversified its supply sources in response to additional U.S. sanctions on Russian oil producers and tankers in early January. By mid-2023, Russia accounted for over 40% of India’s crude imports, a significant increase from less than 1% before western sanctions on Moscow following its 2022 invasion of Ukraine. If Washington moves to neutralise its trade deficit with New Delhi, India could face a 15% widening in its overall trade deficit, based on last fiscal year’s $241 billion shortfall. India must diversify (विविधता लाना) its goods and services trade to reduce its heavy reliance (निर्भरता, भरोसा) on the U.S. Two potential markets are China and the U.K. While imports from China have contributed to about a third of India’s trade deficit for over five years, India’s trade imbalance with the U.K. accounted for less than 3% of its total deficit last fiscal year. The free trade agreement negotiations with the U.K. are an opportunity for India to shift this balance in its favour.

Courtesy: The Hindu

Important Word List With Meaning

1.Shrink (Verb)

Hindi Meaning - सिकुड़ना, घट जाना
English Meaning - To become smaller in size, amount, or value.

2.Deficit (Noun)

Hindi Meaning - घाटा, कमी
English Meaning - The amount by which something is less than expected, especially money.

3.Narrow (Adjective)

Hindi Meaning - संकीर्ण, सीमित
English Meaning - Limited in width, scope, or amount.

4.Reciprocal (Adjective)

Hindi Meaning - पारस्परिक
English Meaning - Given or felt by each toward the other; mutual.

5.Outreach (Noun)

Hindi Meaning - पहुंच, संपर्क अभियान
English Meaning - The act of reaching out to people, especially to provide services.

6.Negotiation (Noun)

Hindi Meaning - समझौता वार्ता, बातचीत
English Meaning - Discussion aimed at reaching an agreement.

7.Surplus (Noun)

Hindi Meaning - अतिरिक्त, अधिशेष
English Meaning - An amount more than what is needed.

8.Dampen (Verb)

Hindi Meaning - कम करना, नम करना
English Meaning - To make something less intense or to make slightly wet.

9.Diversify (Verb)

Hindi Meaning - विविधता लाना
English Meaning - To make something varied or to expand into different areas.

10.Reliance (Noun)

Hindi Meaning - निर्भरता, भरोसा
English Meaning - Dependence on something or someone.

11.Steep (Adjective)

English Meaning - Rising or falling sharply; very high in price or amount.

12.Plunge (Verb)

English Meaning - To fall or drop suddenly and deeply.