Author Description

One of the most successful aspects of India’s structural reforms has been the strength and dynamism of its external sector. The sector continues to be robust, despite sharp increase in India’s imports over exports leading to huge trade deficits. India’s balance of payments has recorded large and persistent surpluses, with foreign exchange reserves at around US $ 360 billion during February 2017. Increased earnings from exports of services and remittances coupled with enhanced foreign investment inflows have provided strength to the external sector. The overall objective of this work is an attempt to identify and quantify linkages between the domestic & world economic variables and the current account of India’s BOP, so as to make them more meaningful in policy terms. Applied econometric methodology in keeping with the modern time series analysis is utilised to ensure rigorous analysis and valid inferences. This study utilising the available econometric techniques attempts to analyse the trends, growth rates, composition & direction of India’s exports and imports of goods and services and identified the determinants of these flows at aggregate and disaggregate levels.