Exhibit I as under provides the data of India's Merchandize Imports (Billion US Dollar) on left axis and Percentage of Food: Fuel, Manufactures and Ores & Metals lmports of India's on the right axis. Similarly; Exhibit 2 provides data of India's Merchandize Exports (Billion US Dollar) on left axis and Percentage exports of Food, Fuel, Manufactures and Ores & Metals on the right axis. Attempt the questions in the context of information provided as under:
A.Trade Balance = Import Minus Exports
b:Trade Deficit If Imports are more than Exports
c:TradeSurplus= If Exports are more than Imports
Exhibit 1: India's Total Merchandize Imports (US Dollar in Billion) and Percentage Imports of Food, Fuel, Manufacturers and Ores and Metals (2012 - 2016)
Exhibit 2: India's Total Merchandize Exports (US Dollar in Billion) and Percentage Exports of Food, Fuel, Manufacturers and Ores and Metals (2012 - 2016)
Assuming India's imports and exportS grow by 10% in 2017 and sectoral share of fuel in both importS andexports grow by 5 percentage basis, what shall be theapproximate deficit of fuel trade in the year 2017?
Solution
India's import in 2017 = import in 2016*(1 + (10/100)) (Since growth rate is 10 percent)
= 350 * 1.1 = 385 (USD in billions)
India's export in 2017 = export in 2016*(1 + (10/100)) (Since growth rate is 10 percent)
= 250*1.1 = 275 (USD in billions)
New sectoral share of fuel in imports = 25+5 =30 percent
New sectoral share of fuel in exports = 10+5 =15 percent
India's fuel imports in 2017 = 385*30/100 = 115.5 (USD in billion)
India's fuel exports in 2017 = 275*15/100 = 41.25 (USD in billion)
Trade deficit of fuel = Fuel import - fuel export = 115.5 - 41.25 = 74.25 (USD in billions)
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