"External debt levels remained low at 20.1 per cent of GDP by the end of September 2019. India's external debt liabilities to GDP, including debt and equity components, has increased at the end of June 2019, primarily driven by an increase in FDI, portfolio flows and External Commercial Borrowings (ECBs)," adds the Survey.
The Balance of Payments position improved to USD 433.7 billion by September 2019 from USD 412.9 billion of forex reserves in March 2019. This is on the back of Current Account Deficit (CAD) narrowing further to 1.5 per cent of GDP in the first half of 2019-20 from 2.1 per cent in 2018-19.
Net FDI inflows remained buoyant attracting USD 24.4 billion in the first eight months of 2019-20, much higher than the corresponding period of 2018-19. Net overseas remittances in the first half of 2019-20 were more than 50 per cent of total receivables in 2018-19, standing at USD 38.4 billion. As per World Bank report of 2019, India's 17.5 million diaspora made it the top remittance-recipient country in 2018, informs the Survey.
The Survey notes that India's merchandise trade balance improved from 2009-14 to 2014-19 on the back of a decline in crude prices. The merchandise Exports-to-GDP ratio declined to 11.3 per cent, due to weakened global demand and heightened trade tensions over 2018-19 to H1 of 2019-20. Petroleum, Oil and Lubricants (POL), precious stones, drug formulations and biologicals, gold and other precious metals continue to be the top exported commodities; the largest export destinations being United States of America (USA), followed by United Arab Emirates (UAE), China and Hong Kong.
The merchandise Imports-to-GDP ratio also declined, entailing a net positive impact on the BoP position. This is because of the large presence of crude oil in the import basket. Share of gold imports, another important component of import basket, has remained stable in spite of a rise in gold prices. Crude petroleum, gold, petroleum products, coal, coke and briquettes constitute top import items. India's imports continue to be largest from China, followed by USA, UAE and Saudi Arabia in that order.
The Economic Survey 2019-20 further observes that non-POL-non-gold imports are understood to be positively correlated with GDP growth. However, non-POL-non-oil imports fell as a proportion to GDP from 2009-14 to 2014-19 when GDP growth accelerated. This may have happened because of consumption-driven growth while the investment rate declined. The continuous decline in investment rate decelerated GDP growth, weakened consumption, dampened the investment outlook; which further reduced GDP growth and along with it, non-POL-non-gold imports as a proportion of GDP from 2018-19 to H1 of 2019-20.
In sync with an estimated 2.9 per cent growth in global output in 2019, global trade is estimated to grow at 1.0 per cent after having peaked in 2017 at 5.7 per cent. The slowdown in world trade reflects a confluence of factors, including a slowdown in investment, reduced spending on capital goods and a decline in trade of cars and car parts. The Survey adds that global trade is projected to recover to 2.9 per cent in 2020, with recovery in global economic activity, although the future is ridden with uncertainties over trade tensions and change in global value chain structures. (ANI)