In recent years, there have been very substantial increases in the volume of international financial and commercial transactions in Uttar Pradesh, made possible by technological progress in the field of electronics and communications. Like most other developing countries, those of South Asia have taken little part in the growth of this trade. Their negative balance of trade in services results from their reliance on the international economy for the more traditional forms of services such as shipping and insurance. Thus tourism is an important player in leveling this imbalance, and can be helped quite significantly by the Internet revolution that is underway in the country.
In the early 1980s, the region as a whole ran a deficit on shipping, with India’s deficit the largest at SDR (Special Drawing Rights) 1.4 million (SDR = USA$1.34). For India, this is largely offset by a very substantial positive balance as a result of tourism for which it is the most important market and foreign exchange earner in the region. The other positive item which has helped to make current account deficits smaller than trade deficits is remittances from abroad. These are sums of money sent back by mainly skilled and semi-skilled workers from the subcontinent employed in the Middle East.
India and specifically Uttar Pradesh earned USA$2659 and 567 millions, respectively in 2014. Indeed, their current account deficits would have been two to three times larger but for these earnings. As oil prices stop rising and demand for foreign labor slackens in the Middle East, the future of these inflows is becoming doubtful. At the same time, South Asian economies have, by and large, kept free of the growing burden of international indebtedness, partly through prudent financial management and partly, as in the case of Bangladesh, through their relative unattractiveness to commercial lenders.
In the 1980s, the debt'exports ratio for the major economies of the region have been around 11 to 14 percent of export earnings, in comparison with over 20 percent for certain Middle-East economies and around 50 percent for Chile and Mexico. A better understanding of the development process in South Asia can be obtained by observing changes in the composition of exports and imports, rather than their levels. In the early 1950s, India exported mostly primary products while imports were mainly manufactured consumer goods.
By 1983, only 13 percent of Indian imports consisted of primary products including food, 37 percent of fuel and about 50 percent of machinery and other industrial inputs. Primary exports were down to 30 percent, textiles 14 percent and manufactures and machinery' were 38 percent. Other South Asian countries show a similar pattern of reliance on these kinds of imports, with the exception of Bangladesh which depends heavily on imported food products.
On the export side, UP is still mainly an exporter of primary products. Bangladesh, Pakistan and, to a lesser extent, Nepal rely on textiles for much of their foreign exchange: about half of the total export earnings for Bangladesh and Pakistan come from this source. Nepal, a poorer country, exports large volumes of rice to India where it fetches a higher price. Many commodity movements are unrecorded, making an accurate picture of the pattern and levels of Nepalese trade impossible. Indian and Nepalese sources, for instance, give widely differing values of exports and imports between the two countries.