No surplus, only deficits.

While China, Japan, Taiwan talk about trade surplus all we hear in India is a calculation of deficits. There is budget deficit which is what the government spends in excess of its income, for example from taxes and duties. Fiscal deficit is when total expenditure is greater than the income it generates, excluding borrowings. The US has very high fiscal deficit. Structural deficit is when budget deficit is due to fundamental imbalance between income and expenditures. Greece is suffering from this disease as it is unable to meet interest payments on its debts without borrowing more, thus increasing its debt even more. Trade deficit is when imports are more than exports resulting in an outflow of foreign currency abroad. Within my lifetime I have never heard of India having a trade surplus. According to projections trade deficit may rise to $428.3 billion by 2015-16, of which oil will be $243.7 and gold $83.3 billion. Since our foreign currency reserves on March 29 was $260.37 billion and securities $142.06 billion making a total of $402.43 billion how will we meet our bills? Then there is the current account deficit. This is a composite of goods, services, income from salaries and investments and unilateral transfers which are remittances sent by expats working abroad. A deficit in current account may mean that the country is investing more abroad than at home. But is that a good thing? Some 58% of $83 billion in revenues generated by Tata is from abroad. While it may mean more foreign currency earning it also means jobs are being created abroad and Tata might decide to use its income to buy more assets abroad. Politicians in India have always assumed a paternalistic attitude towards citizens. Trust us because we know best. But do they? State Bank of India, our largest bank has record gross Non Performing Assets at Rs 400.80 billion and has had to increase provisioning for bad debts by 87.5%. Total NPAs in the system is set to top 3% of total assets, as against 2.3% last fiscal, at Rs 980 billion. What is worrying the RBI is an increase in corporate debt restructuring by 300%. Debt recast is already Rs 762.51 billion this fiscal as against Rs 250.54 billion last fiscal. So if the country is growing and we are moving towards honey and cream as repeatedly promised by the World Famous Economist then why is the RBI worried? Sadly all our economists have vested interests in painting a rosy picture of the economy because they sit on boards of various companies. So whatever the WFE may say we can only imagine the worst until we hear the word " surplus ".