1. India’s merchandise exports are less than its merchandise imports.
2. India’s imports of iron and steel, chemicals, fertilisers and machinery have decreased in recent years.
3. India’s exports of services are more than its imports of services.
4. India suffers from an overall trade/current account deficit.
Select the correct answer using the code given below:
Explanation
Statement 1 is correct: India has historically faced a trade deficit in merchandise trade, meaning that the value of merchandise imports exceeds the value of merchandise exports. This is primarily due to India’s reliance on imports of crude oil, gold, electronics, and machinery, which are higher in value compared to its exports of textiles, gems, jewelry, and pharmaceuticals.
Statement 2 is incorrect: India’s imports of iron and steel, chemicals, fertilisers, and machinery have not decreased in recent years. These imports have remained significant due to domestic demand and industrial requirements. For example, India imports a large quantity of fertilisers to meet agricultural needs and machinery for industrial and infrastructure development.
Statement 3 is correct: India has a surplus in services trade, meaning that the value of services exports (e.g., IT services, software, business process outsourcing) exceeds the value of services imports. The services sector is a major contributor to India’s economy and helps offset the trade deficit in merchandise trade.
Statement 4 is correct: India typically has a current account deficit, although the size of the deficit can vary from year to year. The current account includes merchandise trade, services trade, and other flows like remittances and investment income. Even though India has a surplus in services trade, the deficit in merchandise trade generally outweighs it resulting in an overall current account deficit. Table: Trade during December 2024 December 2024 (USD Billion) December 2023 (USD Billion) Merchandise Exports 38.01 38.39 Imports 59.95 57.15 Services* Exports 32.66 31.63 Imports 17.50 15.63 Total Trade (Merchandise + Services)* Exports 70.67 70.02 Imports 77.44 72.78 Trade Balance -6.78 -2.76