The surplus has been generated not by surging exports, but by weak domestic consumption.

“Imports have fallen across the board, which is more a reflection of the sharp fall in demand this quarter (April-June), although it includes the periods of nationwide and regional lockdowns,” Mumbai-based economist Sreejith Balasubramanian told Quartz. A report from analysts at Edelweiss, also in Mumbai, highlights some of the key numbers: “Non-oil imports are down 45% year-on-year. Electronic goods, one of the key imports from China, are down 34%.”

According to Balasubramanian, the headline trade surplus in June might look good on paper, but it’s actually a worrying sign of the fall in demand, which warrants a close examination of trade in the coming months.

The low global price of oil is also helping India’s trade surplus. It is a major importer of crude and is spending fewer dollars. Reflecting this, the oil trade deficit stands at $8.3 billion in the first quarter of the current financial year, compared to $23.3 billion in the same quarter last year.

For similar reasons, India also posted a current account surplus in the March quarter. (The current account encompasses trade of goods and services, as well as investment income and private money transfers.) Economists believe that even before a stringent Covid-19 led lockdown crippled the economy, India was facing a sharp slowdown. Although exports had fallen to a nine-quarter low, weakness in consumption and a strong inflow of investment income and remittances still helped India to achieve a surplus.

📬 Sign up for the Daily Brief

Our free, fast, and fun briefing on the global economy, delivered every weekday morning.