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Q43 (CDS-II/2026) Economy › External Sector & Trade

Consider the following statements :
1. India runs a current account deficit
2. Merchandise imports of India exceed exports
Which of the statements given above is/are correct ?

Result
Your answer: —  ·  Correct: C

Explanation

Both statements are correct. India historically and structurally runs a Current Account Deficit (CAD). The Current Account is the sum of the balance of trade (exports minus imports of goods and services), net factor income from abroad, and net unilateral transfers.

Statement 1 is correct: Although India occasionally records quarterly surpluses (e.g., during the COVID-19 pandemic due to a sharp drop in domestic demand), the Indian economy typically imports more value in goods, services, and investment income than it exports, resulting in a CAD.

Statement 2 is correct: India consistently maintains a merchandise trade deficit. This is because the value of merchandise imports (dominated by crude oil, gold, electronic goods, and machinery) significantly exceeds the value of merchandise exports. While India often has a surplus in services (like IT and software), it is usually insufficient to bridge the gap created by the large merchandise deficit.

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SIMILAR QUESTIONS

IAS · 2020 · Q42 Relevance score: 6.70

With reference to the international trade of India at present, which of the following statements is/are correct ? 1. India's merchandise exports are less than its merchandise imports. 2. India's imports of iron and steel, chemicals, fertilisers and machinery have decreased in recent years. 3. India's exports of services are more than its imports of services .- 4. India suffers from an overall trade/current account deficit. Select the correct answer using the code given below :

IAS · 2006 · Q136 Relevance score: 4.71

Consider the following statements: I. In India, during the financial year 2004-05 an increase of below 10 per cent over the value of exports (in rupee terms) in the financial year 2003-04 was reported. II. According to the WTO, India’s share in the world merchandise exports crossed two per cent in the year 2005. Which of the statements given above is/are correct?

CDS-I · 2025 · Q61 Relevance score: 4.70

Consider the following statements with respect to performance of the merchandise export of India in FY - 2024 : 1. Share of capital goods such as machinery, equipment and other durable goods decreased substantially. 2. Share of consumer goods and intermediate goods increased. Which of the statements given above is/are correct ?

IAS · 2023 · Q88 Relevance score: 4.53

Consider the following statements : Statement-I : India accounts for 3-2% of global export of goods. Statement-II : Many local companies and some foreign companies operating in India have taken advantage of India's 'Production-linked Incentive' scheme. Which one of the following is correct in respect of the above statements?

IAS · 2003 · Q59 Relevance score: 4.23

Consider the following statements 1. India’s import of crude and petroleum product during the year 2001-02 accounted for about 27% of India’s total imports. 2. During the year, 2001-02, India’s exports had increased by 10% as compared to the previous year Which of these statements is/are correct?