SHIPS leaving Nhava Sheva port, across the harbour from Mumbai, tend to ride higher on the water than when they arrive. India’s trading statistics explain why: steel and other industrial goods from China weigh down the ships as they come in, to be replaced on the way out by fluffy cotton bales, pills and—given India’s perennial trade deficit in goods—empty containers.
India’s economy grew by 7.5% last year, cruising past China’s 6.9% growth. Yet the deficit in goods trade with China continues to widen (see chart), to over 2% of GDP last year. For Indian policymakers this is an irksome reminder of the weakness of the country’s manufacturers. Halving the trade shortfall with China would be enough to eliminate India’s overall current-account deficit, and thus the need for external financing.
The government’s ideas for shrinking the shortfall have been sadly predictable. The minimum import prices it...Continue reading
Source: Business and finance http://ift.tt/1OxK6lU
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