ANALYSING AN ARTICLE by Aditi Basu https://padlet.com/aditibasu1/neoimwrz99csm9cd en-us 2020-07-22 09:28:31 UTC 2023-03-07 04:31:42 UTC hello@padlet.com 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. aditibasu1 https://padlet.com/aditibasu1/neoimwrz99csm9cd/wish/659995715 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]]> 2020-07-22 09:28:35 UTC https://padlet.com/aditibasu1/neoimwrz99csm9cd/wish/659995715 Sahil sahilshaikh635 https://padlet.com/aditibasu1/neoimwrz99csm9cd/wish/660684946 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
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https://timesofindia.indiatimes.com/business/india-business/india-posts-first-trade-surplus-in-18-years-as-coronavirus-hits-imports/articleshow/76984251.cms]]> 2020-07-23 03:18:40 UTC https://padlet.com/aditibasu1/neoimwrz99csm9cd/wish/660684946 Shanaia https://padlet.com/aditibasu1/neoimwrz99csm9cd/wish/660685059 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]]> 2020-07-23 03:18:50 UTC https://padlet.com/aditibasu1/neoimwrz99csm9cd/wish/660685059 Lakshya lakshyarohilla422 https://padlet.com/aditibasu1/neoimwrz99csm9cd/wish/660687178 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

]]> 2020-07-23 03:21:54 UTC https://padlet.com/aditibasu1/neoimwrz99csm9cd/wish/660687178 Sanika https://padlet.com/aditibasu1/neoimwrz99csm9cd/wish/660687509 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]]> 2020-07-23 03:22:24 UTC https://padlet.com/aditibasu1/neoimwrz99csm9cd/wish/660687509 Abhijit https://padlet.com/aditibasu1/neoimwrz99csm9cd/wish/660687574 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 ]]> 2020-07-23 03:22:29 UTC https://padlet.com/aditibasu1/neoimwrz99csm9cd/wish/660687574 Raghvi https://padlet.com/aditibasu1/neoimwrz99csm9cd/wish/660689151 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-
]]> 2020-07-23 03:24:28 UTC https://padlet.com/aditibasu1/neoimwrz99csm9cd/wish/660689151 Reuben reubenverghese1909 https://padlet.com/aditibasu1/neoimwrz99csm9cd/wish/660690303 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.
]]> 2020-07-23 03:25:50 UTC https://padlet.com/aditibasu1/neoimwrz99csm9cd/wish/660690303 RIya https://padlet.com/aditibasu1/neoimwrz99csm9cd/wish/660691387 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]]> 2020-07-23 03:27:17 UTC https://padlet.com/aditibasu1/neoimwrz99csm9cd/wish/660691387 https://padlet.com/aditibasu1/neoimwrz99csm9cd/wish/660691629 2020-07-23 03:27:35 UTC https://padlet.com/aditibasu1/neoimwrz99csm9cd/wish/660691629 ROSHN https://padlet.com/aditibasu1/neoimwrz99csm9cd/wish/660692001 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]]> 2020-07-23 03:28:02 UTC https://padlet.com/aditibasu1/neoimwrz99csm9cd/wish/660692001 Sparsh sparshjain1907 https://padlet.com/aditibasu1/neoimwrz99csm9cd/wish/660692431 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]]> 2020-07-23 03:28:36 UTC https://padlet.com/aditibasu1/neoimwrz99csm9cd/wish/660692431 Pranavi https://padlet.com/aditibasu1/neoimwrz99csm9cd/wish/660696198 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 ]]> 2020-07-23 03:33:48 UTC https://padlet.com/aditibasu1/neoimwrz99csm9cd/wish/660696198 Ajay ajaysreepathi803 https://padlet.com/aditibasu1/neoimwrz99csm9cd/wish/660981823                 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

]]> 2020-07-23 12:42:48 UTC https://padlet.com/aditibasu1/neoimwrz99csm9cd/wish/660981823 Vaishnavi https://padlet.com/aditibasu1/neoimwrz99csm9cd/wish/661536322 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.]]> 2020-07-24 02:29:13 UTC https://padlet.com/aditibasu1/neoimwrz99csm9cd/wish/661536322