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External economic situation in india - recent trends and policy implications


The paper reviews status of the external sector of the Indian economy.  It discusses the trends of imports and exports and direction of external trade since 1984-85, alongwith recent trends in balance of payments, external debt, foreign exchange movements and foreign investment.  The factors that have led to recent slow down in trade and investment in India are examined.  The paper also looks at the South-East Asian crisis and the recent global trends and their impact on India's trade prospects.  In addition, some of the important areas of concern relating to the agreements under the WTO have also been discussed.  In light of various domestic and international developments, the lessons that emerge for India are brought out.


The authors are from Indian Economic Service and are currently working as Deputy Advisers, Perspective Planning Division, Planning Commission. The views expressed in this paper are those of the authors and not necessarily those of the Planning Commission or Government of India.   

The authors are extremely grateful to Dr. Pronab Sen, Adviser (Perspective Planning Division), Planning Commission for his invaluable guidance and very helpful suggestions on the earlier drafts. The authors would also like to thank Mr. M.R. Verma, Senior Research Officer for useful discussions and assistance in data analysis. Assistance from Mr. A.K.Sinha and Ms. Shyamla is also acknowledged. Mr. R.S. Shukla and Mr. M.S. Rathi typed the manuscript.