The outlook for the global demand for the goods and services are continually decreasing as the major markets such as Europe, the US, China, and Japan are in the grip of uncertainty.
As I discussed in my previous blog that the trade deficit of India was 4.2 % in the fiscal year 2011-12 and Indian government & Reserve bank of India are continually trying to control the trade deficit in the fiscal year 2012-13 means they want to increase the export and decrease the export of the country.
Now the new data of the government shows that India’s export dropped down but the decline in import was even sharper. Which is good news for the economy as the Indian rupee is depreciate nearly 20% in the past one year due to the increased trade deficit and imports.
This depreciation in the value of the rupee harms a lot to the economy. We can understand this from the following example:-
The price of crude oil is decreased at its lowest but Indian did not able to take its advantage.
So, A wider trade deficit is never proven good for any economy.