Bibek Debroy’s mantra for fixing country’s trade is: You fix India, and trade will fix itself. Explaining the idea, Noted economist and PMEAC member said that India’s trade prospects will depend on the efforts that are being taken to improve logistics, integrate investments in the global supply-chain, improve the business environment and develop infrastructure.
Bibek Debroy said reforms that are fundamental in nature are non-populist measures which do not give instant pay-offs and will require time to bear fruit in terms of improvements in GDP and productivity. The mantra, therefore, is ‘You fix India and trade will fix itself”, he added.
“These attempts could be seen as a minimum basket of basic goods and services to every citizen, enabling an environment for businesses and directing subsidies to the intended beneficiaries,” Bibek Debroy said at an event organised by FICCI on global trade.
India’s exports, in the past few months, have not shown impressive results. In the third quarter of the fiscal year 2017-18, India’s current account deficit surged to 2% of the GDP due to higher imports, while trade deficit has oscillated between $12 billion to $18 billion.
Trade experts say that India’s CAD is going to surge further in the next fiscal year due to higher oil prices. The World Bank, in its latest India Development Report, flagged concern over slowing exports growth in India. The World Bank in its analysis found that exports as a percent of GDP tripled from 7.3% in 1991 to 22% in 2007, and between 2007 and 2014, it grew only to 25.5%. “The contribution of net exports to growth has been muted, with import growth exceeding export growth in a majority of years,” it said.
It also noted that while the implementation of the Goods and Services Tax (GST) was a tectonic shift towards an integrated and connected market system, boosting India’s trade, but what really needed is infrastructural development to support trade and more private investments.