Trade deficit Current Affairs - 2020
On April 7, India announced restrictions on export of Hydroxychloroquine (HCQ) drug.
What is the issue?
India had imposed ban on export of HCQ drug to prevent the shortage of the drug in the country. The United States and 30 other countries including some of the SAARC countries have been pressuring India to remove the ban. The United States lately has been forcing India upon its ban as the shortages in US has been increasing greatly.
The United States is a major importer of HCQ and other drugs. The other countries that are demanding India to remove the export ban include Brazil, Germany, France, UK, Australia, Israel and Gulf countries. India considering their requests has put on restrictions to the export ban, meaning the ban has not been removed completely.
Significance of HCQ
The Hydroxychloroquine drug is one of the four mega methods considered for trials to contain the spread of COVID-19. The drug is used in the US as a preventive measure. The drug is recommended to asymptomatic patients that are in close contact with the COVID-19 patients.
Tags: Corona Virus • COVID-19 • hydroxychloroquine • India-US • India-US Trade War
On March 16, 2020, the Commerce Ministry reported that the gold imports for the period April to February (2019-20) has reduced by 8.86% as compared to the previous year.
India is the largest importer of gold in the world. As the gold imports of the country have been reduced, the trade deficit has reduced to 143.12 billion USD. It was around 173 billion USD a year ago.
Gold imports of India has been declining since December 2019. On an average India imports 800 to 900 tonnes of gold annually.
What is the issue?
Indian economy has been facing increased current account deficit due to import of gold and fuel.
The Current Account Deficit is the difference between money flowing in on exports and the money flowing out on imports. A country with increasing CAD means that it is becoming uncompetitive. It also means that investors are not willing to invest.
Therefore, reducing gold and oil imports will reduce current account deficit.