Sorry for the delay,
Now we will look at Indian current Economy Situation,
As of Now India has 2.9% of CAD(current account deficit) of Total GDP in Second quarter of 2018, it is 19.1 Billion USD.
It was 1.1 % of Total GDP in in Second Quarter of 2017 and it was 6.9 Billion USD,
Cause of high Trade Deficit:-
1. Trade War Between USA and CHINA:-
it was the reflection of trade war between USA and China due to trade war Indian economy suffer through high trade deficit because as of now USA charges high tariff on each and every product which are Exported from India to USA because India had Surplus on USA of 22.9 Billion USD in 2017. So as we are aware about Trump policy, he is very much concern about trade related stuff ,so Trump doesn't want any burden on USA economy so he started charging high tariff on all imported goods and services in that he charged high tariff on some of Indian products as well.
The reason behind Trade war between USA and China was trade Surplus of China upon USA was $375 Billion Dollar in 2017, so it was the major reason behind trade war between USA and China, As we are aware China is manufacturing hub of the world even companies like Apple, Harley Davidson American companies manufacture their products in China, because in China they get Cheap raw material to manufacture their products and Cheap labor because China has highest population of World, So as of now their is negotiation going on between china and USA upon trade relation because there is only one country across the globe is giving serious competition to USA in terms of Economy and Army power as well so USA is very much concerned about it, We know Russia is 2nd Powerful country in world but Russian Economy is not performing well Undoubtedly Russia has huge military power and Russia has largest storage of Nuclear weapon but when war starts and Tanks start moving it takes a lot of money and it gives direct impact on economy, as i said before Russia has not that much capability to afford any major war with USA or any big contraries, because Russian economy is not able to afford any war.
Now there is only country "CHINA" it can afford any war with any country because China has huge economy of 25.238 trillion USD So, that's the reason USA doesn't want any competitor in terms of their economy that's why in frustration they are charging high tariff on Chinese Exported products.
Now Coming To second Point:-
2. Raise in Price of Crude oil
As We know India is the one of the largest importer of Crude Oil from Various Middle East Countries like Saudi Arabia,Iran,Venezuela and Iraq and many more country, due to raise in price of Crude oil India currency depreciated against US Dollar up to 1 Dollar($)= 75 rupees,
because crude oil price was 85 dollar per barrel, so as we have seen in recent year if price of crude oil increase Indian rupees get depreciated and if Price of decrease Indian rupees get appreciated, so the reason behind depreciation of Indian currency is Indian has to pay in US dollar to middle east countries so that's the major factor which affect Indian currency, recently in December Crude oil price was 55 USD per barrel so in that scenario Indian currency also appreciated or strengthen against dollar and it was 1 USD=67 Rupees, but we have seen rupees depreciated within two days after OPEC (Organization of Petroleum Exporting Countries) meeting in Vienna Austria on 6th December because in that meeting OPEC countries mutually agreed to cut Oil Production by 1 million barrel Per day(bpd), so OPEC countries want to decrease supply of Crude oil because according to economics if the supply of commodities gets lower or less the price of commodity would be high or higher.
Note:- RBI Governor Urjit Patel resigned on 10 December 2018 and in resignation letter Cause of resignation was " Personal issue" it has been observed that whenever high level bureaucrat resign from their post they normally do not blame any individual or party for their resignation but we have seen controversy between central government and RBI governor upon PCA and Government has also evoked Section 7 of RBI Act there is one more reason that RBI has also provided very less dividend only 30 thousand crore in 2018 where as in 2017 RBI had provided as dividend was 66 thousand Crore rupees,
so there are a lot of tension between Central Government and RBI.
So as of now Shaktikant das as a 25th Governor of RBI he is totally made in India because his all education qualification comes from India. there are a lot of people who are raising question about the qualification of RBI new appointed governor because he was graduated in History so before raising question upon qualification of New appointed Governor people should go and check his experience he is more experience than urjit patel, He know the ground reality of Indian finance and Economic system.
Please do comment your view on this blog,
I will be waiting for your valuable feedback
Thanking and Regards
Amit Kumar
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