India’s Terms of Trade: A Commodity Group-wise Analysis

This article examines the Indian terms of trade during the period 1980-81 to 2002-03. Through the study, it is found that the general index of Net Barter Terms of Trade (NBTOT) was unfavorable to India in the early few years of the study period; however, since 1983-84, it reveals a favorable trend. Further, it is noted that the Gross Barter Terms of Trade (GBTOT) is favorable throughout the study period. The Income Terms of Trade (ITOT) points out that the capacity of the country to import is encouraging almost in the entire study period. The author points out that the mean values of NBTOT for the commodity groups like, food and food articles, beverages and tobacco, animal and vegetable oil, fats and waxes, manufactured goods classified chiefly by material have deteriorated in the post-liberalization period compared to pre-liberalization period. On the contrary, some commodity groups like crude materials except fuels; mineral fuels, lubricants, etc; chemicals and related products; machinery and transport equipment; and miscellaneous manufactured articles, have indicated an improvement since the pre-liberalization period in terms of the mean values of NBTOT. This study suggests that the Indian exports can quote higher prices in the international market only when the quality and quantity of the products improve.