Business Matters | Why should India’s trade deficit matter to you (yes, You)?

A video explaining trade deficit, current account deficit and how India’s figures on the same can affect you

When your country imports more than it exports, a trade deficit occurs. It does mean that it is buying more items from outside the country than making them inside and selling to foreign nations.

But this imbalance is not always unhealthy. Deficits occur when a country is on a path of growth, and seeks more investment than it generates savings.

India went into a trade surplus for a short while during the pandemic, where domestic demand was low and we hence needed to import less than usual. 

Now that COVID restrictions have eased, local demand is rising and we have begun importing more and have returned to deficit territory again.

The question to ask is: how much of a deficit is healthy? And why should you as a consumer of normal everyday products and services, keep an eye on your currency is performing? Do watch.