India's exports declined 17.6 per cent year-on-year during the current financial year (April-January) and stood at $217.7 billion. Imports during the period also declined by 15.5 per cent to $324.5 billion on the back of lower cost of petroleum oil and lubricants (POL) imports for the year so far.
As a result, during 2015-16 (April-January) trade deficit decreased to $106.8 billion compared with $119.6 billion in the corresponding period of 2014-15, according to the Economic Survey 2015-16.
The Survey, however, pointed to a pick-up in growth in some large advanced economies along with lower global commodity prices and relative financial stability amidst periodic turbulence in the external sector environment.
The Survey presented to the parliament today by finance minister Arun Jaitley testifies a strong macroeconomic outlook for the country.
The Economic Survey further says that while exports slow down may continue for a while before picking up in the next fiscal, continuance of low commodity prices globally augurs well for sustaining low trade and current account deficit.
As a portion of GDP, the current account deficit (CAD) is likely to be in the low range of 1.0 to 1.5 per cent. Moderate growth in the invisibles surplus, coupled with lower trade deficit, resulted in lower CAD of $26.8 billion (1.3 per cent of GDP) in 2014-15 and $14.4 billion (1.4 per cent of GDP) in H1 of 2015-16.
India's balance of payments (BoP) position remained comfortable during the first half of 2015-16. Low levels of CAD coupled with moderate rise in capital inflows resulted in rise in foreign exchange reserves of $10.6 billion in the first half of 2015-16.
India's foreign exchange reserves at $351.5 billion as of 5 February 2016 mainly comprised foreign currency assets equal to $328.4 billion (93.4 per cent of the total) and gold at $17.7 billion. With increase in reserves in 2015-16 (H1), all traditional reserve-based external sector vulnerability indicators have improved. The reserves cover for imports increased from 8.9 months at end-March 2015 to 9.8 months at end-September 2015, says the Survey.
During 2015-16 (April-January), the average exchange rate of the rupee depreciated to Rs65.04 per dollar against Rs60.92 per dollar in 2014-15 (April- January).
India's external debt has remained within safe limits as shown by the external debt to GDP ratio of 23.7 per cent and debt service ratio of 7.5 per cent in 2014-15. ''The prudent external debt policy of the government of India has resulted in external debt remaining within safe and comfortable limits and in containing its rise,'' the Survey pointed out.