SSC GD 2026 PYQ — Question 36

Correct Answer:

Persistent trade deficit due to imports

Explanation:

A fundamental and persistent drawback of India's trade balance is its structural trade deficit, driven primarily by heavy imports. India consistently imports more goods (such as crude oil, gold, electronics, and industrial raw materials) in terms of value than it exports, leading to a recurring merchandise trade deficit. Although India maintains a surplus in services trade, the massive deficit in the merchandise (goods) sector outweighs it, keeping the overall trade balance in deficit.

Key Points:

India's high reliance on imported petroleum products and crude oil is the single largest contributor to its merchandise trade deficit.

While services exports (like IT and IT-enabled services) perform strongly, they only partially cushion the persistent goods trade deficit.

Managing the trade deficit remains a central challenge for India's macroeconomic stability and foreign exchange reserves management.

Important Questions and Answers:

Question: Which sector primarily drives India's persistent trade deficit?

Answer: The merchandise (goods) sector.

Question: What is India's largest import item by value that heavily impacts its trade balance?

Answer: Crude oil and petroleum products.