After a strong start to goods exports in the first quarter of 2024-25, momentum has slowed down. Export values dropped by 1.5% in July, hitting an eight-month low, and the decline worsened to 9.3% in August. This decline coincided with a record-high import bill of $64.4 billion in August, resulting in a merchandise trade deficit of $29.7 billion, the second largest after the $29.9 billion gap in October 2023.

Reasons for the widening trade deficit:

• Although exports have declined over the past two months, imports have not followed suit, increasing by 7.5% in July and 3.3% in August. This pushed the trade deficit to a nine-month high of $23.5 billion in July, widening further by $6.2 billion in August.
• While several of India’s top export sectors, such as petroleum and gems and jewellery, experienced significant drops (oil exports fell by 22.2% in July and 37.6% in August, and jewellery exports shrank by over 20% in both months), imports continued to rise.
• In August, slower growth in sectors like pharmaceuticals and electronics was observed. Additionally, with the slowdown in China’s economy, exports of certain goods such as stone, cement, and iron ore declined.
• However, as oil prices fell by $6 per barrel in August, India’s oil import bill dropped by a third to $11 billion, bringing the petroleum deficit to a three-year low, as noted by QuantEco Research economists.
• “The widening trade deficit was mainly driven by gems and jewellery, alongside smaller contributions from miscellaneous products and electronics,” the economists noted.
• While exports of gems and jewellery fell below $2 billion, India’s gold imports more than doubled in August to an unprecedented $10.1 billion.
• This contrasts with a 10.7% drop in gold imports in July and the $3 billion to $3.4 billion range seen since April. Trade officials attributed the surge to a reduction in the gold import duty from 15% to 6% in the Budget, rising gold prices, and jewellers stocking up for the festive season. Economists predict that the full effect of duty cuts on gold and other items will continue to impact the import bill in the coming months.

Could a wider trade deficit pose risks?

• “For a developing economy with high growth, the trade deficit should not be concerning as long as there are no foreign exchange issues,”
•  Foreign capital inflows have remained positive in recent months, and India’s foreign exchange reserves reached a record $675 billion as of August 2, which the Finance Ministry noted is enough to cover 11.6 months of imports.
• Although this coverage may decrease if imports stay above $60 billion, strong services exports, which increased by over 10% from April to August, offer some reassurance.

What about foreign trade in goods?

While global trade is expected to grow faster in 2024 compared to 2023, demand remains weak in most developed markets. In addition to geopolitical tensions, the upcoming U.S. elections and increased tariffs on Chinese goods, coupled with China’s struggling domestic economy, pose challenges for countries like India.

As China's import demand weakens, it may seek to offload products in non-U.S. markets at lower prices. Furthermore, these factors are likely to keep oil prices down, negatively impacting India’s oil exports. Overall, concerns about global demand are increasing, and although India aims to increase goods and services exports to a trillion dollars each by 2030, the path forward will likely be challenging

1.The term "Twin Deficit" in the context of an economy refers to which of the following?

1. Fiscal deficit and Revenue deficit
2. Fiscal deficit and Current account deficit
3. Trade deficit and Revenue deficit
4. Trade deficit and Primary deficit

Select the correct answer using the code given below:
(a) 1 only
(b) 2 only
(c) 3 only
(d) 4 only

• The health department activated the Nipah protocol by establishing 16 committees as outlined in the standard operating procedure for Nipah and began identifying individuals who had close contact with the victim after he exhibited symptoms approximately 10 days earlier.
• On September 15, Kerala's Health Minister Veena George announced, based on test results from the National Institute of Virology (NIV), Pune, that the man, a student in Bengaluru, had died from Nipah.
• This zoonotic virus can cause severe illnesses ranging from respiratory infections to fatal encephalitis. Following this confirmation, restrictions on social movement were enforced, and face masks were made mandatory in public areas of Malappuram district.
• This marks the second Nipah-related death in the Malappuram district within two months. On July 21, a 14-year-old boy from Chemrassery passed away from Nipah at the Government Medical College Hospital in Kozhikode.
• While this triggered an alarm and government-imposed restrictions, attention shifted to the neighboring Wayanad district due to Kerala's worst landslide on July 30. The Nipah cases from July 21 and September 9 occurred within 10 kilometers of each other in a densely populated area.
• The source of the virus remains unclear, although the boy was believed to have contracted it after consuming hog plum, and the method of transmission for the Bengaluru student remains unknown.

What is the history of Nipah in Kerala?

• Since 2018, Kerala has experienced six outbreaks of Nipah virus. A total of 22 people have died from the virus, with the first outbreak claiming 17 lives in Kozhikode and Malappuram. A 2021 outbreak in Pazhur, Kozhikode, led to one death, while the August 2023 outbreak in Kozhikode resulted in two fatalities. The recent incidents in Malappuram within two months have raised concerns that Nipah could become endemic in the region.

Why was there a delay in identifying the virus?

• The 24-year-old victim returned from Bengaluru in late August and sought treatment at various clinics after developing a fever and mobility issues on September 5. He was admitted to MES Medical College on September 8 with symptoms resembling meningitis or encephalitis and passed away the next morning. A physician’s suspicion led to testing of body fluid samples, which confirmed Nipah virus.

How did the government respond?

• The health department and local authorities swiftly designated five wards in the Tiruvali and Mampad panchayats as containment zones. Schools, madrasas, tuition centers, and anganwadis were closed, and shops were allowed to operate under limited hours. Social gatherings were prohibited, and masks became mandatory across the district, particularly for students and teachers.
• A route map of the victim’s activities was created, and 267 people who had been in contact with him were quarantined. These individuals, including his family, friends, and medical personnel, were closely monitored, with their serum samples tested at the virology lab—all results have been negative so far. Additionally, 30 of the victim’s classmates in Bengaluru were asked to self-quarantine.
• A Nipah control room was set up in Malappuram, and senior health officials, led by the director of the health department, K.J. Reena, have been monitoring the situation. Health workers conducted a field survey within a three-kilometer radius of the victim’s home, covering nearly 8,000 houses and identifying 175 fever cases, which were placed under observation. Psychological support was also extended to around 300 people.

What is the source of Nipah?

Bats are considered the primary carriers of Nipah virus. Transmission to humans occurs through consumption of fruits contaminated by bats or direct contact with the bodily fluids of infected individuals. Healthcare workers and family members of infected people are at high risk.

The origin of the infection in the 24-year-old remains unclear, and while bats are often implicated, experts are divided on this attribution. Efforts to eradicate bat colonies following the 2018 outbreak were unsuccessful, and a definitive link between Nipah and bats in Kerala has yet to be established

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