Exports fell for the first time since the 2009 global financial crisis in March this year, as demand weakened in the US and Europe. Exports dropped 5.7 per cent to $28.6 billion from the same period a year earlier.
Commerce Secretary Rahul Khullar warned in January that exporters in India faced a “difficult year”, pointing to economic and financial weakness in the European Union, India’s largest trade partner.
The current account deficit was $19.6 billion in the December quarter, higher than $9.7 billion a year earlier.
Rising global oil prices pushed up import bills for the country, which buys 80 per cent of its oil from overseas. The deterioration in the current account deficit is expected to pile pressure on the rupee, which fell nearly 16 per cent against the dollar in 2011.
Imports rose 24.3 per cent to $42.6 billion in March, government data showed on Tuesday. Oil imports rose 32.5 per cent to $15.8 billion. The trade deficit was $13.9 billion. Exports rose an annual 21 per cent to $303.7 billion for the financial year 2011-12, while imports rose 32.2 per cent to $488.6 billion, figures released by the trade ministry also showed. The trade deficit for the full financial year was $184.9 billion.
Economists warned against reading too much into monthly figures and suggested any dim interpretation should not overlook the fact exports surpassed the target of $300 billion in 2011-12 even as the world was crawling on the path of economic recovery.
The scenario in the US and the euro zone impacted engineering exports, as they fell 19 per cent short of the target of $72 billion set for the last financial year and only reached $58.2 billion.
Madan Sabnavis, chief economist, CARE Ratings, said, “One should not look at the monthly numbers, as exports were very volatile throughout the year. Instead, the cumulative figures give an overall picture of an impressive performance.”
Khullar said the year-on-year growth was irrelevant. “Comparison should be done on a month-on-month basis. The export market had effectively collapsed from September in the previous financial year... The first six months were almost schizophrenic, while the remaining six months saw a marked deceleration,” he said.
In fact, the merchandise exports reached $303.7 billion in 2011-12, a rise of 21 per cent over $251.1 billion in 2010-11. The government had set a target of $300 billion of exports for the last financial year.
“Looking at the situation in Europe and China, India may not be able to achieve 20 per cent growth in the next fiscal but we surely can target a 15 per cent growth,” added Sabnavis.
“In the first half of 2011-12, the engineering exporters were getting a good number of orders, but in the second half there was weak demand from western markets like the US and Europe,” said an official of the Engineering Export Promotion Council (EEPC), under the Ministry of Commerce.
The US and Europe together account for over 60 per cent of India's total engineering exports. The ministry, in a strategy paper, has set a target of $125 billion for engineering exports for 2013-14. The overall export target has been set at $500 billion by then.