Trade policiesPresentation by:AbhinavManishaRohanRonakSaurabhCURRENT Account deficit A measurement of a countrys trade in which the value of goods and services it imports exceeds the value of goods and services it exports.In terms of composition of exports, there has been a shift from labour intensive products to capital intensive ones. Private transfers have gone up.Exports/ GDP increased 11% points 1990-91 to 2011-12 , Imports/GDP increased by 18% points. (across the border increase; both oil and non oil)Concern: Rising CAD in the midst of a slowing economy.Sharply declining merchandise trade balance is largely responsible for worsening CAD

Current AccountMerchandise Trade BalanceInvisiblesCAPITAL ACCOUNTCapital AccountFDIPortfolio flows(biggest component in 2009-10)Debt Flows (30%, share has declined, but grown in value terms $19.3 billion 2011-12)The ongoing CADs have been financed by capital inflows(surplus on capital account)

A surplus capital flows in excess of CAD existed through most of the last decade reserves continued to accumulate.

Overall capital flows which reached a peak of $107 billion in 2007-08 came down to $68 billion in 20011-12 . This is also as a result of interventions by RBI to arrest the decline of rupee.

Current situation of CADThe current account has consistently been in deficit since 2004-05RBI estimates current account deficit at 1.5 per cent in FY16Rising CAD and slowing economyNo significant slowdown in imports despite of slowing economyA sharply deteriorating merchandise trade balanceHistorically, Bulk imports have accounted for nearly 40.2% of total importsnull