With reference to the international trade of India at present, which of the following statements is/are correct? 1) India’s merchandise exports are less than its merchandise imports. 2) India’s imports of iron and steel, chemicals, fertilisers and machinery have decreased in recent years. 3) India’s exports of services are more than its imports of services. 4) India suffers from an overall trade/current account deficit. Select the correct answer using the code given below:

The correct answer is D (1, 3 and 4 only). Statement 2 is the one that fails.

Statement 1 is correct. India runs a persistent merchandise trade deficit because imports, led by crude oil, gold, electronics and coal, exceed exports.

Statement 2 is wrong. Imports of iron and steel, chemicals, fertilisers and machinery have generally risen. Infrastructure spending, manufacturing demand and fertiliser needs all push these up. Trade data does not show a sustained fall.

Statement 3 is correct. India has a services trade surplus, with software, business and travel services exports exceeding imports.

Statement 4 is correct. The goods deficit is larger than the services surplus, so the current account, which also includes remittances and income flows, usually shows a deficit. The 2020-21 deficit was small, so check the year if a question asks for present data.

The core concept is the balance of payments: current account equals trade balance plus services, income and transfers. For Mains, this links to CAD financing, rupee pressure and oil import dependence.

Trap: Assuming a dip in one import category means imports fell overall, or that a services surplus automatically cancels the goods deficit.