Indians’ Craze for Electronic Gadgets: Reason of Higher Trade Deficit

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Indians adore Gold and Gold Jewellery and do not leave even a small occasion to buy Gold or Gold Jewellery but it seems that Indians have changed their taste. As per the new reports, Indians have a new-found attraction for Electronics specially the Smart Phones. Yes, there is significant rise in purchase of Smart Phones, Imported TVs and Computers which has made Electronics to India’s second largest importer after Crude oil.  From the Indian Economy’s point of view, it is bad news as it widens trade deficits of India and also not good for Indian currency’s stability in the international market which is going down due to costlier imports.

Trade deficit is the amount by which country’s imports go above the exports of the country.

Poll conducted by Bloomberg forecasts that the current trade deficit will widento 2.3 per cent of Gross Domestic Product in the financial year 2018-19 from 1.9 per cent presently in the current financial year.

This rise in imports of electronic items has been heavily impacting the current account deficit. Earlier the import of Crude Oil was the only challenge for current account deficit but now electronic items has also become another challenge. Due to relentless demands of electronics items like Smart Phones, TVs and Computers, the demand of Gold has fallen and demand for Gold has dropped to No. 3. Now net deficit due to Gold is down but imports of Electronic items have doubled in the last 5 years.

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