India reported its first trade surplus in nearly 18 years owing to decreased demand for crude oil, gold and other merchandise goods because of the COVID Pandemic. The trade surplus of India for the month of June is $790 million. This is the first time the country has had a trade surplus since the year 2002 when a $10 million trade surplus was recorded. The import of petroleum and crude oil (which is the largest in the country) witnessed a 55 per cent slump followed by gold imports that were impacted by 77 per cent. While non-oil and non-gold imports slumped by as much as 41.37% to $15.57 billion in June 2020. In May, the decrease in imports demand for these items was at 33.47 per cent.
According to government data, “Merchandise imports contracted 47.59% in June to $21.11 billion from a year ago. Exports too fell 12.41% to $21.91 billion”.
Chief India economist of Barclays, Rahul Bajoria said, “The relative improvement in exports is encouraging for India’s growth prospects, but the persistent weakness in imports is a reflection of selective sectoral lockdowns, lower commodity prices and weak underlying demand. A goods trade surplus is unlikely to be sustained, as India’s domestic demand is inching back towards normalcy”.
While exports body chief Sharad Saraf said, “with the global trade forecast showing a gloomy picture, there is an urgent and immediate need for a special exports package for the employment and labour-intensive sector of exports for reviving India’s foreign trade sector. Besides implementation of the economic measures announced, creation of an Export Development Fund with 1% corpus of the total value of exports during the last fiscal, MEIS of 2% across the board and 4% for labour-intensive sectors and addressing risky exporters issues are some of key concerns, which should be considered to give a much-needed boost to the exports sector and the overall economy”.