Question
Which of the possible deficit occurs when a country's
imports exceed its exports during a given time period?Solution
A trade deficit occurs when a country's imports exceed its exports during a given time period. It is also referred to as a negative balance of trade (BOT). According to the preliminary data released by the Commerce and Industry Ministry, India’s trade deficit widened to a record $23.33 billion in May as imports grew at a faster pace compared to exports amid high commodity prices owing to the Russia-Ukraine conflict. Imports surged 56.14 per cent to $60.62 billion in May on the back of a sharp jump in petroleum products amid rising global crude oil prices. The share of petroleum products in India’s total imports was 30 per cent in May, growing 91.6 per cent year-on-year to $18.1 billion. Gold imports witnessed a 759 per cent jump to $5.8 billion; electronic goods rose 28.5 per cent to $5.44 billion; and coal imports grew by 2.6 times to $5.3 billion in May.
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