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India's Economy | Fiscal Policy | Economic Growth
If surplus of foreign funds is over and above what is required to fill the current account deficit, excess is transferred to "Foreign Exchange Reserves" and vice versa.
Causes of problems in BOP
Increasing developmental imports
Larger imports for petroleum,oil and lubricants
Low world demand for agro based products
Low quality and high price of India's products
Protective measures by many countries against Indian goods
Foreign trade is the exchange of capital, goods, and services across international borders or territories.
Indian Economy-Performance and Policies
India's foreign trade
To send goods or services across national frontiers for the purpose of selling and realizing foreign exchange.
To bring in goods or services from a foreign country for use, sale, processing, reexport.
The major items that India exports are:
Gems and jewellery
Ready made garments
Machinery and transport equipment
Fish and fish preparations
Cotton fabrics and yarn
The major items that India imports are:
Petroleum, oil and lubricants
Pearls and precious stone
Major trends in exports
India's exports have recorded over 20% annual growth since 2001-02.
‘Govt in process of changing India’s economic environment’
Not only are there significant economic costs to data localization, the potential gains are more limited than governments imagine. Data server farms are hardly significant generators of employment, populated instead by thousands of computers and few human beings. The significant initial outlay they require is largely in capital goods, the bulk of which is often imported into a country. The diesel generators, cooling systems, servers, and power supply devices tend to be imported from global suppliers. Ironically, it is often American suppliers of servers and other hardware that stand to be the beneficiaries of data localization mandates. One study notes, “Brazilian suppliers of components did not benefit from this [data localization requirement], since the imported products dominate the market.” By increasing capital purchases from abroad, data localization requirements can in fact increase merchandise trade deficits. Furthermore, large data farms are enormous consumers of energy, and thus often further burden overtaxed energy grids. They thereby harm other industries that must now compete for this energy, paying higher prices while potentially suffering limitations in supply of already scarce power.