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There has been an export surplus in the country for the first time in over a decade, meaning the number of total exports has exceeded the number of total imports. In the traditional sense this should be beneficial to an economy, however in India (and any other countries that are facing an export surplus) is only because the total imports have gone down (nearly by 58.7% ) in light of the pandemic.

Now, why have the imports gone down? This is because countries are barring trade amongst nations in order to curb the spread of the virus. In India's case, however, the Atmanirbhar Bharat policy (Self-reliance) also plays a major role in the reduction of trade imports.

It need not necessarily mean that if there is a surplus in the exports the revenue has increased and the country's economy is doing well. This situation itself is a perfect example. Although there is an export surplus, the amount of revenue has not increased. The surplus has only occurred due to a decrease in imports. This, in turn, indicates the slowing down of the economy instead of the economic growth.

Citations:
https://www.timesnownews.com/business-economy/economy/article/india-turns-net-exporter-for-first-time-in-almost-two-decades-records-trade-surplus-in-june/622084

https://www.india.gov.in/spotlight/building-atmanirbhar-bharat-overcoming-covid-19

https://www.hindustantimes.com/analysis/disentangling-india-s-trade-surplus/story-giOg4uynVrzwDHi0xlh8kK.html#:~:text=In%20April%202020%2C%20India%20registered,and%20imports%20falling%20by%2058.7%25.&text=The%20rate%20of%20contraction%20in,April%20to%2047.6%25%20in%20June.

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The total trade surplus of the Indian economy is interesting to observe. Paradoxically coming at a time when the global market is just starting to open up, it is difficult to understand how this could possibly occur. The crux of the matter here is that this surplus is not a result of an increase in the export; the gross export has actually contracted by a factor of around 12.4%. The reason behind this net surplus is a simultaneous contraction in imports by just shy of 50%. But what does this result in?

To begin with, let us look at what has delayed the fall in gross export. The reason there was any fall to begin with was due to a fall in the sales of jewellery, textiles and fabrics, as well as petroleum products. All of these are to be expected, as these are all, for the most part, either luxury goods or products whose necessity is based on travel. Therefore, there would be a rightward shift in demand for all of these products.

Overall, the surplus is not a sign of prosperity by any means. It is simply a product of a general fall in imports that the fall in exports did not match.

https://www.timesnownews.com/business-economy/economy/article/india-turns-net-exporter-for-first-time-in-almost-two-decades-records-trade-surplus-in-june/622084

https://www.livemint.com/industry/manufacturing/india-s-trade-balance-turns-surplus-in-june-11594818105997.html

https://tradingeconomics.com/india/exports

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Despite the lock-down being imposed for months altogether, India recorded trade surplus in June. This made India a net exporter for the first time in almost two decades. Against a deficit of $15.28 billion in June 2019, the trade surplus for June 2020 is estimated to be at $790 million.

There are various reasons for the following:
1. Due the imposition of lock-down, transportation has been restricted. Hence, petrol, diesel and other products are not being consumed.
Similarly, due to weddings and other functions being put off, gold is also not in demand among the citizens. It is a luxury not a necessity, and therefore, not something that the people will want to purchase in the current crisis.
Import of machinery and engineering goods has reduced since not all industries are allowed to function.

2. India exported 50 million hydroxychloroquine to the United States on the request of Prez. Trump. This trade was India's biggest drug export

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Despite lockdown being established, India has still managed to surplus in international exports, as imports remain minimal. This is because exporters have urged the govt to allow them to operate factories, even with the minimum workforce.

There has been a decline in the national demands of goods such as gold and other luxury imports as people would rather prefer to save their money in the present situation and time for necessities and safety.

https://retail.economictimes.indiatimes.com/news/industry/exporters-urge-govt-to-allow-them-to-operate-factories-with-minimum-workforce-seek-other-measures/74858516

https://www.outlookindia.com/newsscroll/india-posts-marginal-current-account-surplus-in-q4fy20/1882120

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Is this good news for the economy, which has been on a downward slope since the past couple of years? Well, this may come across as positive news, but economists say there is nothing to rejoice as they attribute this largely to lower domestic demand and fall in crude oil prices.

THe DOMESTIC DEMAND of the country has been at a significant low as the lockdown removing their monthly income and some even loosing their jobs completely. This mass loss in disposable income led to a drop in Domestic demand. This drop will severely reduce the imports that are coming in

Fall in crude oil prices is due to the reduced usage of heavy machinery like Cars, Trucks and Vans. Crude oil

https://www.businesstoday.in/current/economy-politics/dont-rejoice-india-first-current-account-surplus-since-2007-is-deceptive/story/408636.html

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analysis Updated: Jul 20, 2020 06:55 IST

Will the self-reliance campaign create local manufacturing to substitute certain import items?(Bloomberg)

In June, India recorded its first trade surplus in the last 18 years, the first such month since January 2002. On a year-on-year basis, the Indian merchandise exports fell 12.4%. The imports fell 47.6% over last June. The cumulative effect was a trade surplus of $790 million.

Earlier in May 2020, the trade deficit was $3.15 billion, where the exports had fallen by 36.5% and imports by 51%. This resulted in the trade deficit shrinking by over 79%. In April 2020, India registered a trade deficit of $6.8 billion, with exports falling 60.3% and imports falling by 58.7%.

Between April and June, as the economy gradually opened up and as buying centres also restarted business activities, the merchandise export contraction narrowed down from 60.3% in April to 12.4% in June. The rate of contraction in imports, however, has been more stubborn, moving from 58.7% in April to 47.6% in June.

So, while the June trade surplus reflects a demand weakness in the Indian economy, shackled by the states imposing their local versions of the lockdowns, which at the central level had started to ease in early June, it also reflects a sharp turnaround in the export activity.

Exports can be analysed in two broad categories - petroleum and non-petroleum commodities.

In June, the petroleum exports shrunk by 31.6% while the non-petroleum exports were down 10.1%. The global demand for petroleum products has been hit in a big way due to the Covid-19 pandemic, as it has in India. These exports have seen contraction in value terms over the years as crude prices have been benign.

What is, however, remarkable for June exports was that the non-petroleum category bounced back to only 10.1% contraction over the last year. In April 2020, the non-petroleum exports had fallen by 59.3% over April 2019. So June 2020, in fact, signified a very strong comeback. Despite facing uncertain global demand and supply disruption, Indian exporters did well to resume operations and maintain order fulfilment flow.

Indian imports can be analysed in three broad categories - crude oil and petroleum products, gold and silver, and others.

In June 2020, India's import of crude oil and petroleum products fell 55.3%, which was not unusual. With limited retail sales and restricted commercial goods movement, this demand remained tepid. Another factor in comparing imports in value terms is the pricing of the Indian crude oil basket. Between April and June 2019, the Indian basket was priced upwards of $70 a barrel, while between April and June 2020, the Indian basket peaked around $35 a barrel. So the import contraction in value terms would anyway have been far higher than the import contraction in volume terms. By all accounts, this is not a "bad contraction".

In the months to come, this category of imports should catch up in volume terms as economic activity expands, though it should be kept in mind that the Indian crude oil and petroleum imports will also see long term trend adjustment due to factors such as higher electrification and gasification of the economy. These factors will produce an opposite impact on the import demand in terms of the volume composition.

The biggest percentage fall in imports was for the gold and silver category, which shrunk by 76%. As households focused on savings and social occasions such as marriages and festivals became austere, the shrinking of this import category was natural. In commonly accepted economic wisdom, gold and silver imports, and the Indian hoarding of these raw materials, have been long derided as foreign exchange guzzlers. In that sense, a fall in import in this category should actually be welcome news, albeit temporary. As social occasions open up in step with the opening of the economy, eventually, this demand will come back, perhaps attracting the opposite criticism then.

The third category of non-crude oil and petroleum products and non-gold and silver imports saw a shrinking of 41%. This category, which formed 65% of the total imports in June 2019, shrunk by the narrowest margin in June 2020 among the three categories.

These imports have elements such as capital goods, which signify industrial activity and demand as well as consumer goods, which signify consumption demand in India. Falling imports in this category do signify that the Indian domestic demand environment remained weak - but in a lockdown, this was to be expected.

In absolute terms, $8.6 billion of import difference - just over 40% of the total fall of $20 billion between June 2020 and June 2019 - came from crude and petroleum products and gold and silver. While these commodities are "raw materials", their lesser imports here aren't necessarily an adverse reflection on the economic situation.

A further $1.5 billion reduction came from the decline in coal imports. While domestic coal production in both May and June 2020 came in at 41 million tonnes, at reduced levels over corresponding months last year, they were enough to account for the levels of economic activity. So about half of the year-on-year import decline in June was purely situational, and not necessarily a negative reduction.

The Aatmanirbhar Bharat plan launched by the Narendra Modi government to propel the economy post the pandemic will also focus on non-crude oil and petroleum products and non-gold and silver imports to be localised, if not in entirety than in significant parts of the value chain. What will matter is how this category of imports evolves in the "open economy" part of the financial year and whether India succeeds in creating their local manufacturing alternatives.
(Data for this piece is sourced from reports in Hindustan Times and Mint and the ministry of commerce) Aashish Chandorkar is a Pune-based public policy analyst The views expressed are personal

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analysis Updated: Jul 20, 2020 06:55 IST In June, India recorded its first trade surplus in the last 18 years, the first such month since January 2002. On a year-on-year basis, the Indian merchandise exports fell 12.4%. The imports fell 47.6% over last June. The cumulative effect was a trade surplus of $790 million.

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According to The Hindu, the monthly trade has been in surplus for the first time in 18 years. Total trade declined after January and was the lowest in April before picking up in May and June. Trade deficit reduced consistently from January and recorded a surplus in June. The country recorded a trade surplus of $793 million in June, after registering a deficit of $3.1 billion in May. SBI's research team has factored net services exports at $75 billion and remittances by the Indian diaspora at $60 billion in FY21. " Taking all this into account, we expect a Current Account Surplus of 0.7% of GDP at $19 bn in FY'21," said S K Ghosh, group chief economist at State Bank of India. " Overall we also expect a BoP surplus of $67 billion. Thus, the Rupee will get some cushion from the volatile portfolio outflows and Rupee can have a definitive appreciative bias in current fiscal" he said
India's gold imports plunged 99.9 percent year-on-year in April to their lowest in nearly three decades as air travel was banned and jewelry shops were closed amid a nationwide lockdown to curb the spread of coronavirus, a government source said. The world's second-biggest consumer of the precious metal imported around 50 kilograms of gold in April, down from 110.18 tonnes a year ago. In value terms, April imports dropped to $2.84 million from $3.97 billion a year ago.
Dividing India’s export into goods and services -

India’s top 5 goods (merchandise) export in 2014/15 were -

1. Refined petroleum and related products - 18% of goods export ($57 billion)

2. Jewelry, pearls, precious stones, etc - 13% of goods export ($41 billion)

3. Vehicles and vehicle parts - 4.7% of goods export ($14 billion)

4. Boilers, machinery, mechanical appliances - 4.4% of goods export ($13.8 billion)

5. Organic chemicals - 3.7%

(Total goods export - $314 billion )

India’s top 5 services exports in 2012/13 were -

1. Software services - 47% of services export ($65 billion)

2. Business services - 20% of services ($28 billion)

3. Travel - 13% of services ($18 billion)

4. Transportation services - 12% ($17 billion)

5. Financial services - 3.5% ($5 billion)

(Total services export - $139 billion )

[ GOOD EFFORT]

Bibliography:-
https://www.thehindu.com/data/why-indias-trade-surplus-in-june-is-not-a-good-sign/article32156785.ece
https://economictimes.indiatimes.com/
https://www.business-standard.com/article/markets/april-gold-imports-plunge-99-9-to-three-decade-low-amid-lockdown-report-120050500330_1.html
https://www.quora.com/What-does-India-export#:~:text=Major%20exports%20of%20India%20include,of%20the%20largest%20textile%20exporters.

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According to Times Now News, India has achieved a surplus on trade, despite the lockdown due to the pandemic. In June of 2019, India was experiencing a deficit of $15.28 billion. However in 2020, India now has a trade surplus estimated at $790 million, making it a net exporter for the first time in the last decade, with imports plunging as the COVID-19 pandemic hit domestic demand for crude oil, gold and other industrial products. India has started to export major farm products such as rice, meat, dairy and other processed food items after the government stepped in to resolve issues regarding transport and packaging in the pandemic. The government altered laws and permits to ensure that the country's agriculture market did not suffer during the lockdown.
A decline in imports impacted the markets for gold and silver, which shrunk by 76%, as households were now focusing on saving and occasions where gold and silver were required reduced drastically. Crude oil and petroleum products experienced a hit in imports, as countries no longer deemed these as necessities, and as capital goods.

[ GOOD EFFORT]

https://economictimes.indiatimes.com/news/economy/foreign-trade/indian-begins-export-of-major-farm-items-amid-covid-19-lockdown-government

https://www.thehindu.com/data/why-indias-trade-surplus-in-june-is-not-a-good-sign/article32156785.ece

https://www.khmertimeskh.com/50746796/disentangling-indias-trade-surplus/

https://www.financialexpress.com/economy/lockdown-effect-cbic-extends-

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A trade surplus is achieved when the value of exports is more than the value of imports.
In this case, India achieved its first trade surplus in 18 years. This is due to the large fall in domestic demand due to the pandemic therefore, the imports fell and the exports did not decline as much, therefore there was a trade surplus. The reason that domestic demand fell is that the disposable income of most people decreased due to the lockdown therefore they were not able to but as much.  Another factor in the trade surplus is that lots of countries are avoiding China, therefore they turn towards India as an alternative.

Also, India's imports can be divided into 3 broad categories:
1.  Crude oil and petroleum
2.gold and silver
3. other products
1. The demand for crude oil and petroleum has fallen because of a nationwide lockdown, this led to a fall in its price, therefore the value of its import has fallen.
2. Gold and Silver are luxuries and due to a fall in disposable income, fewer people are able to afford it, therefore the demand for it has decreased and the value of its import has fallen.
3. Other products: these are capital goods and consumer goods, the value of its imports have shrunk because of the lack of activity due to a nationwide lockdown.

While all these cause the value of imports to fall the value of imports has stayed constant due to demand from other countries buying Indian products as an alternative to Chinese products.

[ GOOD EFFORT]

1.  https://www.timesnownews.com/business-economy/economy/article/india-turns-net-exporter-for-first-time-in-almost-two-decades-records-trade-surplus-in-june/622084

2.   https://www.thehindu.com/data/why-indias-trade-surplus-in-june-is-not-a-good-sign/article32156785.ece#:~:text=A%20trade%20surplus%20occurs%20when,exports%20exceeds%20that%20of%20imports.&text=This%20was%20mainly%20because%20of,largely%20due%20to%20the%20pandemic.

3.  https://www.livemint.com/news/india/current-account-surplus-may-not-be-all-good-news-11595261443952.html

4. https://www.hindustantimes.com/analysis/disentangling-india-s-trade-surplus/story-giOg4uynVrzwDHi0xlh8kK.html

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After about 2 decades, India has managed a balance of payments surplus. Compared to last year June, both the exports and the imports have declined due to the pandemic, however the imports declined by a larger percentage which was 47.59% whereas the exports declined only by 12.4%. The imports were $40.29 billion in June 2019, whereas in June 2020 the imports were recorded as $21.11 billion. The exports were at $25.01 billion in June of 2019 whereas it was recorded at $21.91 billion in June 2020.This decline is due to the tensions between India and China and the disruption in the global trade because of the pandemic.

https://www.thehindubusinessline.com/opinion/the-paradox-of-indias-trade-surplus/article32011941.ece

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India recorded a surplus on its current account for the first time in nearly 18 years.  One reason for this surplus is that even though the exports fell by 12.4 percent compared to last year, imports fell by 47.6 percent! Another reason could be that there was a an increase  in exports of pharmaceuticals, chemicals, iron ore, rice, cereals, fruits and vegetables. Even though there was a very small increase in imports of few goods such as vegetable oils, pulses, and unroasted iron pyrites, the increase in exports was far greater than that of imports.
https://www.livemint.com/industry/manufacturing/india-s-trade-balance-turns-surplus-in-june-11594818105997.html

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During the pandemic, exports and imports of countries fell drastically. Earlier in May 2020, the trade deficit was $3.15 billion, where the exports had fallen by 36.5% and imports by 51%. This resulted in the decrease of the trade deficit by 79%. Although, India’s exports shrunk at a lower rate than imports causing the trade surplus. Between April and June, as the economy gradually opened up and as buying centres also restarted business activities, the merchandise export contraction narrowed down from 60.3% in April to 12.4% in June. The rate of contraction in imports, however, has been more stubborn, moving from 58.7% in April to 47.6% in June.
The biggest fall in imports was of golds and silver(luxury item) as people focused on saving money for necessities. There are a lot of businesses closing down and this causes uncertainty for the future, thus affecting spending, saving and borrowing.
The amount of imports for crude oil and petroleum decreased as well. This was due to the decrease in movement(exports of goods that need crude oil) with limited retail sales and restricted commercial goods movement, this demand remained low.

[ GOOD EFFORT]

https://www.hindustantimes.com/analysis/disentangling-india-s-trade-surplus/story-giOg4uynVrzwDHi0xlh8kK.html

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One reason for a surplus in the BOP is a restriction on imports from China, India's largest import partner (1). This impacted the BOP significantly because imports from China make up 16% of India's imports (2). More worryingly, India has had a drop in both exports and imports in June, however, the drop in imports was greater than the drop in exports. This contributed to the trade surplus (3). Amongst India's major exports, the ones that saw a notable rise were iron, oil seeds, chemicals (4).

The fall in the import of gold was due to it being an unproductive import.

Citations
1.
https://www.outlookindia.com/newsscroll/india-posts-marginal-current-account-surplus-in-q4fy20/1882120

2. https://tradingeconomics.com/india/imports#:~:text=India's%20major%20import%20partners%20are,and%20Switzerland%20(5%20percent).

3. https://www.thehindu.com/data/why-indias-trade-surplus-in-june-is-not-a-good-sign/article32156785.ece#:~:text=A%20trade%20surplus%20occurs%20when,largely%20due%20to%20the%20pandemic.

4.
https://www.bloombergquint.com/business/amid-demand-slump-india-records-rare-trade-surplus-in-june

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A surplus in the current account has occurred even when exports declined compared to last year. This has happened as imports have fallen much more. The merchandise import value has shown around a 50% decrease compared to last year's June value and this has caused the value of exports to be greater than the value of imports.

The massive decline in imports has been caused by the decline in domestic demand, specifically that of crude oil (down 55.29%) and gold (down 77.42%) and other industrial products.

The decrease in demand for imports have been due to the pandemic. Coronavirus has caused a huge decline in the use of vehicles as people are now confined to their homes. This, in turn, has caused the demand for fuel to reduce. Since the main use of crude oil is for fueling transportation, its demand has also taken a hit.

The decline in gold has been due to the pandemic as well. In these harsh times, not many can afford to buy luxuries and everyone is prioritizing necessities.

[ GOOD EFFORT]

Taken from:
https://www.timesnownews.com/business-economy/economy/article/india-turns-net-exporter-for-first-time-in-almost-two-decades-records-trade-surplus-in-june/622084
&
https://timesofindia.indiatimes.com/business/india-business/india-posts-first-trade-surplus-in-18-years-as-coronavirus-hits-imports/articleshow/76984251.cms

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Read the article and look for some related articles, do some research and find out how did India manage a surplus in BOP in the month of June 2020 in spite of a lockdown.

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Read the article and look for some related articles, do some research and find out how did India manage a surplus in BOP in the month of June 2020 in spite of a lockdown.

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https://www.timesnownews.com/business-economy/economy/article/india-turns-net-exporter-for-first-time-in-almost-two-decades-records-trade-surplus-in-june/622084

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Key Highlights

Merchandise exports in June 2020 stood at $21.91 billion, as compared to $25.01 billion in June 2019, a decline of 12.41 per cent year-on-year.

India's current account balance saw a small uptick at 0.1% of GDP in the March quarter

New Delhi: Amid a sharp downturn in demand and imports due to the pandemic, India managed a rare trade surplus for the first time in almost 18 years as imports declined faster than exports. Demand for crude oil, gold and other goods slipped pointing towards a slowing economy.

Both imports and exports are plunging since March amid worsening global demand, India-China tensions and disruption of global trade due to the pandemic.

The trade surplus for June 2020 was estimated at $790 million as against the deficit of $15.28 billion in June 2019.

Merchandise exports in June 2020 stood at $21.91 billion, as compared to $25.01 billion in June 2019, a decline of 12.41 per cent year-on-year.

Meanwhile, imports in the month were recorded at $21.11 billion or Rs.1,59,892.42 crore, down 47.59 per cent lower in Dollar terms and 42.85 per cent lower in Rupee terms over imports of $40.29 billion or Rs 2,79,771.07 crore in June last year.

Oil imports in the month were $4.93 billion ( or Rs. 37,341.70 crore), which was 55.29 percent lower in Dollar terms and 51.24 percent down in Rupee terms), as compared to June last year, as per the data released by the Ministry of Commerce.

"Rapid Turnaround of Exports: Realising PM @NarendraModi ji's vision of Atmanirbhar Bharat, for the first time in 18 years, India records a monthly goods trade surplus in June!" Commerce and Industry Minister Piyush Goyal tweeted.

India's current account balance saw a small uptick at 0.1% of GDP in the March quarter of the financial year 2019-20. It shrank to 0.9 per cent in FY20 from 2.1% in FY19 due to lowering trade deficit.

The Indian economy is expected to shrink by 5% in the current financial year 2020-21.

While IMF expects the Indian economy to contract by 4.5% following a longer period of lockdown and slower recovery, the World Bank says it India's GDP to contract 3.2%.

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India turns net exporter for first time in almost two decades; records trade surplus in June

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Merchandise exports in June 2020 stood at $21.91 billion, as compared to $25.01 billion in June 2019, a decline of 12.41 per cent year-on-year. India's current account balance saw a small uptick at 0.1% of GDP in the March quarter New Delhi: Amid a sharp downturn in demand and imports due to the pandemic, India managed a rare trade surplus for the first time in almost 18 years as imports declined faster than exports.