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Export nightmares giving sleepless nights to economy

The government's ambitious plans to enhance India's share in world trade to one per cent by 2006 from a dismal 0.7 per cent came in for a rude shock in the year 2001 as exports recorded negative growth for the first time in over a decade.

Apart from high cost of financing and various other domestic factors, slowdown in exports, that came down to $20.96 billion in April-September this year against $21.39 billion during the corresponding period last year, could be largely attributed to a global recession, compounded by terrorist strikes in the US that floored India's high-growth IT sector.

Coinciding with the pronounced slowdown, induced by absence of domestic demand, the decline in exports, against a 12 per cent growth target, came as a major blow to government, forcing the ministers of commerce and finance to start a joint initiative.

Even as the government announced some concessions including those on the front of export credit and duty drawback scheme in the last two months, the foreign exchange earners of the nation saw about two per cent fall in export growth so far during the current fiscal.

So much so that the finance minister is forced to concede that realisation of indirect taxes particularly the customs levy would be far too short of target.

Reflecting the industrial slowdown in the country, the sluggish imports at $25.93 billion during April-September this year compared to $25.57 billion during the same period last year have, however, proved to be a blessing in disguise, helping contain the trade deficit to below $5 billion mark.

Therefore, it was not surprising that a depressed exporters' community sought a downward revision in growth target while government stopped predicting possibilities of attaining the target.

Instead, the commerce ministry has embarked on a mid-term strategy to put exports on a sustainable high-growth plateau and insulate them from the volatility of international markets in the face of a negative growth recorded so far in the current fiscal.

The final draft of the strategy, which identifies potential markets and products to boost exports is now under consideration. The strategy is expected to be announced early next year.

Poor performance on the external trade front came at a time when domestic industrial production, particularly manufacturing, continues to perform poorly.

As per the latest data, Index of Industrial Production was a mere 1.9 per cent during October this year compared to an impressive 6.8 per cent in the same month last year.

Cumulative growth during April-October remained subdued at 2.2 per cent against 5.9 per cent in the corresponding period last year.

Exports, which were hovering at double digit growth rates until April, fell to single digit and then into negative from July-August.

2001: The Year That Was…
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