External Sector

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  • In its Update, published on 20 January 2015, the IMF projected the global economy to grow from 3.3% in 2014 to 3.5% in 2015 and further to 3.7% in 2016. The United States is the only major economy for which growth projections have been raised by 0.5 percentage point to 3.6% for 2015.
  • The WEO Update projects India’s GDP growth at market prices to be 6.3% (downward revision of 0.1 percentage point compared to the WEO of October 2014) in 2015 and for the year 2016, projected growth is 6.5% surpassing the projection of 6.3% for China. As per the IMF WEO Update, January 2015, world trade volume growth projections have been placed at 3.8% and 5.3%, respectively for 2015 and 2016—lower by 1.1 percentage points and 0.2 percentage point respectively.
  • Over the last ten years, India’s merchandise trade (on customs basis) increased manifold from US$ 195.1 billion in 2004-05 to US$ 764.6 billion in 2013-14.
  • As per the World Trade Organization (WTO), India’s share in global exports and imports increased from 0.8% and 1.0% respectively in 2004 to 1.7% and 2.5% in 2013.
  • Its ranking in terms of leading exporters and importers improved from 30 and 23 in 2004, to 19 and 12 respectively in 2013.
  • While India’s total merchandise trade as a proportion of gross domestic product (GDP) increased from 29.0% in 2004-05 to 41.8% in 2013-14, India’s merchandise exports as a proportion of GDP increased from 1% to 17.0% during the same two time periods.
  • After registering very high growth of 40.5% in 2010-11, growth of merchandise exports moderated to 21.8% in 2011-12. The high growth in two years led to overall exports crossing the US$ 300 billion mark.
  • In 2014-15 (April-January), imports grew by 2.2% to US$ 383.4 billion as compared to US$ 375.3 billion in 2013-14 (April-January). While the value of POL imports declined by 7.9% in 2014-15 (April-January), gold and silver imports grew by 8.0% in 2014-15 (April-January). Non-POL and non-gold and silver imports which largely reflect the imports needed for industrial activity grew by 7.8% in 2014-15 (April-January), after registering a decline of 0.7% and 6.9% respectively in 2012-13 and 2013-14.
  • The top seven product groups accounting for nearly 80.9% of India’s total exports in 2014-15 (April-December) were: petroleum products (19.4% share); gems and jewellery (13.0% share); agriculture and allied products (12.0% share); textiles and allied products (11.6% share); chemicals and related products (10.1% share); transport equipment (8.5% share) and machinery (6.3% share). Marine products and leather and leather manufactures recorded relatively high growth in 2012-13, 2013-14, and 2014-15 (April-January).
  • One of the major items in India’s import basket is the POL group, which accounted for 6% of India’s total imports in 2013-14. Gold and silver imports accounted for 11.4% of India’s total imports in 2012-13 and 7.4% in 2013-14. These imports declined by 9.0% and 40.4% respectively in 2012-13 and 2013-14 but registered a positive growth of 8.0% in 2014-15 (April-January). Imports of pearls and precious and semi-precious stones grew by 5.4% in 2013-14 and declined by 3.9% in 2014-15 (April-January).
  • Region-wise, India’s export shares to Europe and America have declined over the years—from 23.6% and 20.1% respectively in 2004-05 to 18.6% and 17.2% respectively in 2013-14. Conversely, the shares of India’s exports to Asia and Africa have increased from 47.9% and 6.7% respectively in 2004-05 to 49.4% and 9.9% respectively in 2013-14.
  • In 2014-15 (April-December), India’s exports to the European region grew by only 0.2%. India’s exports to Africa and America grew by 12.9 and 14.5% respectively and to Asia, a major destination accounting for nearly 50% of India’s exports, by 2.2% in 2014-15 (April-December).

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Current Affairs for IAS Exam