Question

We have prepared an article about the general economic situation of India. Now, as a second assignment, our teacher asks for a general comment and a question that has not been asked before and the answer to that question. It is very important not to be short. We should comment according to the information in the photo. We have to ask a question and answer that question again with a comment. a very urgent job.

1-Export Performance In recent years. India exported mostly pearls, precious and semi-precious stones and iewelcx (16 percent of total shipments); mineral fuels, oils and waxes and bituminous substances (12 percent); vehicles. Darts and accessories (5 percent): ouclear.reactors. boilers, machinery and mechanical appliances (5 percent); pharmaceutical products (5 percent): and organic chemicals (4 persent). India's main export, partners are: United States (15 percent of the total exports), United Arab Emirates (11 percent), Hong Kong (5 percent), China (4 percent), Singapore (4 percent) and United Kingdom (3 persent). (tendingeconomics.com) India's total export performance displays a positive growth rate of 2.13 percent (combination of goods and services) with an estimated US $ 49.64 billion. Exports. including exports of goods in Eebruary 2020, cached $ 27.65 billion in Eebruary 2019, with a positive growth rate of 2.91 percent compared to $ 26.87 billion. Exports. excluding oil and iewelers were realized in April. Compared to $ 20 billion in Eebruary 2019-20 February, 2017, it was $ 21.23 billion, which means a positixe growth of 6.16 percent Import Performance India main imports are: mineral fuels, oils and waxes and bituminous substances (27 Dercent of total imports); Deatls, precious and semi-precious stones and icwelcx (14 Dercent); electrical machinery and equipment (10 percent); nuclear.ceactors, boilers machinery and mechanical appliances (8 percent); and organic chemicals (4 percent). India's major import partners are: China (16 percent of total imports), the United States. (6 percent), United Arab Emirates (6 percent), Saudi Arabia (5 percent) and. Switzerland (5 percent). (tradingeconomics.com) Imports, in February, 2020 shows 2.86 persent.bigher, in cunees terms oxet imports of USD 36.59 billion, But during the period April-Eebruary, 2018-19 registering a negative growth of 7.30 percent. dollar and the majör commodity groups of imports showing negative growth in Eebruary, 2020. Trading Partners As pec 2019 data lodia's top trading partners.ars following United States.: a records 16.8% of total exports. United Arab Emirates records. 9.2% China: records, 5.3% Hong Kong records 3.5%

Answer 1

General comment.

India is one the fastest growing economic powers of the world. International trade has played a significant role in the economic growth of India. Trade performance of the country has improved over the years.

We can assess the the trade performance of India from exports ,imports and trade balance.

In the recent year, exports showed a positive growth of 2.13 percent.India earns a great deal of income by exporting pearls, semi-precious,precious stones and jewellery.

Imports showed negative growth in February. India's main imports are oil,mineral fuels waxes and bituminous substances. Major portion of these imports are essential for the industrial development of a nation.

India's current account deficit is also showing a sharp decline of around 0.9 percent.

All these point towards lndia making it's present known in the global trade scenario.

Question

India has a different system of exchange rate compared to other countries. What is the role played by that exchange rate system in the development of India's international trade?

Answer.

Indian exchange rate system is unique. It has the features of both fixed exchange rate system and floating exchange rate system. Exchange rate of rupee with other currency is determined by the market forces of demand and supply. ( which is a characteristic of floating exchange rate system.) . However India's central bank (monetary authority ) intervenes in the market if its necessary.

This kind of system enabled lndia to deal with trade imbalances. For example, when ever there was trade deficit, depreciation of rupee made the imports from lndia cheaper and India's major trading partners US, UAE, China and UK imported more. A major portion of lndia exports went to America.

Similarly, when the demand for foreign exchange in order to finance. Imports increased , monetary authority saved the economy by selling foreign exchange and lndia was able to import the required amount of goods mainly from China , US and UAE.

Thus its clear that , the unique exchange rate system adopted by lndia has played a key role in the growth of international trade in lndia