Protection from wealth, but not from disaster.

"The government is finally talking about manufacturing-led exports," which is good, but "it is getting increasingly protectionist on the trade front, by increasing customs duties and planning other measures," wrote Vivek Kaul. "The weighted average tariff rate in 1990 stood at 56.4%. In FY91 (financial year 1990-91), total exports to gross domestic product (GDP, a measure of the size of the economy) was 6.24%." By 2013, the average tariff rate had fallen to 6.34% and exports peaked at 25.18% of GDP in FY14. Since 2014, exports have fallen to 19.5% of GDP. We need to import many things that are not available locally and to pay for that we have to sell products that we excel in, wrote Prof Ricardo Housmann. But, foreigners have a choice of where to buy from so we have to compete. "Because they are subject to greater competition, export activities tend to undergo faster technological and productivity improvements than other parts of the economy." Customs duty on several imports were raised in the 2018 budget and this year's budget "raised customs duties on 37 items in order to provide a level playing field for domestic industry". Will this increase exports? "No," wrote Puja Mehra. "Being a global player and sustaining high growth demand a higher share of exports in global value chains." Customs duty on mobile phones was increased from 0 to 10% in 2017, to 15% the same year and to 20% in 2018. While import of mobile phones fell from $4.47 billion in 2013 to to $3.31 billion in 2017, import of telecom parts increased from $1.34 to $9.41 billion. It was $16.28 billion in FY19. India exported mobile phones worth $2.7 billion in 2013 which fell to $1.4 billion in FY19. Higher import price allows domestic producers to increase prices, so mobile phone prices jumped 0.5% between April and December FY20. Rather than expanding, the Index of Industrial Production (IIP) contracted 0.3% in December. "On the whole, between April and December 2019, the IIP has now shown a cumulative growth of a meagre 0.5%." The financial year starts on 1 April, which is when the budget changes kick in. "No country has achieved developed status on the back of a purely domestic economy." wrote Sundeep Khanna. East Asian nations like Hong Kong, Singapore, Taiwan and South Korea "used their highly developed ports and well-educated population, while investing in industrial infrastructure and offering massive tax concessions to foreign investors, to yank themselves out of poverty into prosperity by exporting everything from computers to cars". Since the 1980s, the world has experienced 3 episodes of debt crisis, wrote Prof Kaushik Basu. "By the time of the debt wave in 2008, India was globally integrated and severely affected. But its economy was growing at nearly 10% annually and it recovered within a year. Today, India's economy is facing one of its deepest crises in the last 30 years," so we could go under. Higher duties are protecting us from becoming rich but will not protect against a crisis. Heads we lose, tails we also lose.