India's Trade deficit with China doubled amid strained ties
It may sound strange but true. India may have adopted a tough posture against China saying unless peace and tranquility is maintained on the borders, trade, cultural and other relations cannot be normal. But India's imports from China have been rising rapidly year after year ever since border clashes erupted in 2020. India's trade deficit with China in 2020-21 was low at Rs 3.25 lakh crores. Those watching Indo-China trade were shocked to see that the trade deficit sky-rocketed to a new high of Rs 5.46 lakh crores in 2021-22. As if this was not enough, the 2022-23 saw a historic figure as the trade deficit touched Rs 6.68 lakh crores mark. Within a span of two years the balance of trade more than doubled in favour of China.
This was also despite the fact that a tough stance was adopted by the Modi government refusing permission to several Chinese companies to set up shop in India. Many high-tech companies had even agreed to bring technology and take an Indian partner as well. But no permission was granted to any one of them. But India's trade deficit doubled within two years from Rs 3.25 lakh crores to Rs 6.68 lakh crores in 2022-23.
The mind boggling figures were officially stated in the Lok Sabha the other day by the Ministry of Commerce & Industry in response to a question by an MP. The government said “most of the goods imported from China are capital goods, intermediate goods and raw materials and are used for meeting the demand of fast expanding sectors like electronics, telecommunication and power.” In order to boost domestic manufacturing and reduce dependence on imports, the government has also launched the Production Linked Incentive (PLI) scheme in 14 sectors. But there is no respite from the mounting trade deficit.
India's Debt rose by 2.65 times in 9 years
The debt of the Central Government touched a record high of Rs 155.60 lakh crores i.e. 57.10% of the GDP as on March 31, 2023. The debt as on March 31, 2014 was just Rs 58.6 lakh crore i.e. 52.20% of the GDP, a five percentage point jump.
The debt sky-rocketed to new heights within nine years under the current dispensation. The debt of the Union Government in 2020-21 was Rs 121.9 lakh crore and Rs 105.10 lakh crores in 2019-20. Revealing this figure in an unstarred question in the Lok Sabha, Finance Minister Nirmala Sitharaman said that one of the reasons for the high debt percentage and amount was on account of Covid-19 global pandemic, which hugely disrupted projections of Government’s public
finances.
The questions posed by two opposition leaders, Ravneet Singh Bittu and Adhikari Deepak, were about the details of debt amount per citizen of the country as on 30th June, 2023. But the minister gave the total debt which touched a record high of Rs 155.60 lakh crores. However, the Minister claimed that the risk profile of Central Government’s debt stands out as safe and prudent in terms of accepted parameters of indicator-based approach for debt sustainability. The Government debt is held predominantly (about 95%) in domestic currency. Outstanding external debt is financed by multilateral and bilateral agencies at concessional rates.
Its a different matter that interest paid by the Central government also rose from Rs 5.83 lakh crores in 2018-19 to Rs 9.28 lakh crores in 2022-23. The Government had announced its commitment to reduce the fiscal deficit to the level below 4.5% of GDP by 2025-26. But it's a long way to go.
