While a direct causal link between dangerous trade deficits and corruption has not been universally established, corruption can contribute to and exacerbate trade deficits in a country. This lack of establishment of direct relationship has happened because corruption has been institutionalised almost by all nations and no nations would like to tackle this menace. They have deliberately created a system that encourages corruption and erodes efficiency and transparency.

But we at Sovereign P4LO have decided to look into this matter and to clarify the situation for the larger interest of India. Corruption is a major nuisance in India and all govt offices and authorities are corrupt to the core. The entire system and machinery has been put to work for the benefit of Govt Buddies and Modi Ka Gang alone. That is why inequality of income has increased many folds in India and about 100 crore Indians are begging for 5 kg ration.

Corruption can have serious effect upon an economy and trade deficit in the following manner:

(a) Corruption as a non-tariff barrier and increased import costs: Inefficient bureaucracy, bribery, and rent-seeking behavior (seeking profits through political influence rather than production) at borders and in customs can act as a hidden “tax” on imports. This translates to higher costs for businesses, making imports less competitive and potentially contributing to a wider trade deficit if the country relies heavily on imports. Bribery to bypass regulations or expedite processes further distorts fair competition, potentially favoring less efficient firms or those engaged in illicit activities.

(b) Corruption undermining export competitiveness: Corruption within a country can disincentivise domestic and foreign investment, leading to inefficient production, lower quality goods, and less competitive exports in the global market. When a country’s exports are less competitive, it leads to reduced export earnings and a larger trade deficit.

(c) Distortion of economic policies: Corruption can influence policy decisions, prioritising personal gain over national economic interests. This can lead to inefficient or unsustainable economic policies, such as misallocated subsidies, poorly targeted investments, or a lack of transparency in trade agreements, all of which can affect trade balance and potentially widen the trade deficit.

(d) Impact on investment and foreign direct investment: High levels of corruption deter foreign direct investment (FDI) and can lead to capital flight, both of which can negatively impact a country’s productive capacity and ability to export, thus exacerbating a trade deficit. Corruption also reduces private investment within a country, further hindering the development of domestic industries and their export potential.

(e) Weakening of institutions and the rule of law: Corruption erodes trust in public institutions, weakens the rule of law, and undermines the functioning of the legal and judicial systems. This unstable environment further discourages trade and investment, creating an adverse business environment and impacting a country’s long-term trade balance.

It is important to note that a trade deficit can be driven by a multitude of economic factors and is not solely caused by corruption. However, addressing corruption can be an integral part of improving a country’s overall economic health, enhancing its trade performance, and potentially narrowing a trade deficit.

Let us consider few examples from India:

(1) In 2023, India’s merchandise imports from China stood at $99.59 billion, which was 18.2% lower than the $117.68 billion worth of exports reported by China. While genuine error(s) are possible but successive happening of such events for many years point towards institutionalised corruption in India.

This means India is deliberately showing lesser trade deficit to not only give a rosy picture of its economy but also to protect Govt Buddies and Modi Ka Gang that are mostly benefiting from import to and export from India.

(2) There is a current trade deficit of $58.9 billion between Russia and India, despite more than a five fold rise in bilateral goods trade over the last four years. The imbalance has resulted from India’s oil purchase from Russia that did not benefit Indians at all. On the contrary, Indians were fooled with Ethanol mixed fuel that is damaging their vehicles. Insurance companies have also declared that they would reject insurance claims for vehicles that are not compatible with Ethanol based fuels. Most old vehicles are not compatible with it and many new ones may also not be compatible.

There are many more examples but these two examples are sufficient to bring home the point. Trade deficits from China, Russia, etc are not benefiting India, Indians and Indian economy but they are benefiting Modi, Govt Buddies and Modi Ka Gang only says Praveen Dalal. That is why hunger, unemployment, crimes, poverty, inequality of incomes, etc have significantly increased in India.

Do not be fooled by the lies, jumlabaazi and circus of Modi and his Moronic IT Cell, as Indian economy is doomed and has become a gig economy. Wake up and reclaim India before it is too late says Praveen Dalal.