Source: Live Mint.com, Jun 19, 2018
The widening merchandise trade deficit is reason for concern. It’s easy to pin the blame on high oil prices. However, oil prices were much higher in fiscal year 2013-14, the year of the taper tantrum, but the trade deficit was lower then. More fundamental factors are at play.
Crude oil imports have been the Achilles’ heel of India’s external trade. But Brent crude prices in 2013-14 were more than double the average for 2017-18. The oil import bill in 2017-18 was much lower than in 2013-14. Why then did the trade deficit shoot up from $134 billion in 2013-14 to $161 billion in 2017-18?