India’s goods exports grew 9.1% to $38.13 billion in May, while imports rose 7.7% to $61.91 billion. Even the textiles sector recorded a healthy growth of nearly 10% in May “after several months of sluggishness.
However, despite exports growing faster than imports, the merchandise trade deficit surged to a seven-month high of $23.78 billion in May. This was 5.5% higher than the deficit recorded in May 2023, and 24.5% over April’s trade gap of $19.1 billion, which in turn was the highest in four months. Compared with April, May’s import bill was 14.4% higher, while the value of exports rose 8.9%.
".....When your economy is growing faster than the world, then obviously there will be these twin effects — higher domestic demand will mean less exportable surplus, and your requirements for imports from the rest of the world will be higher than the world’s requirements from you,” - the reply from the Secretary of Commerce (Government of India).
Alright, I understand India's economy is rising faster than the world average. The imports do rise in such economies. But my question is -
Can India sustain its higher growth rate by widening this game to extreme limits?
Have all economies seen such gaps in imports and exports while they were growing faster?
A bit of Correction