Overall exports in 2008-09 grow at slowest pace in 7 yrs.
The continued contraction in exports over the past five months is set to worsen in March, as quick estimates available with the commerce ministry reveal that overseas sale of Indian goods dipped about 30 per cent and stood at $12 billion.
Though the updated data will be released on May 1, the month under consideration could well see one of the sharpest monthly contractions in India’s export history.
Government officials expect the contraction to continue in the first half of the current fiscal because of falling global demand and the “base effect”, meaning exports expanded at a fast pace in the corresponding period last year.
The contraction this March has been attributed to weak demand from the United States and Europe, which account for 35 per cent of India’s exports. Moreover, overseas sale of Indian goods had expanded by 34.14 per cent in the year-ago month and stood at $17.25 billion, resulting in a high base.
Quick estimates for March exports show that the annual exports from India for the 2008-09 fiscal year will be $168.6 billion, a 3.56 per cent expansion over the previous year. This is the lowest annual expansion in exports since 2001-02, when overseas sale of Indian goods dipped 1.6 per cent. Exports contracted in nine of the 12 months of 2001-02.
India, therefore, will miss even the revised export target of $175 billion for 2008-09 set by the commerce ministry. The original target of $200 billion was downsized in February this year.
India’s export performancec
|Year||Value ($ bln)||Growth*|
|Source: Commerce ministry,
#Based on March 2009 quick estimates
Commerce Secretary Gopal K Pillai had recently said India’s exports could be flat in 2009-10, against the backdrop of a 9 per cent fall in global trade forecast by the World Trade Organisation. The government has announced three fiscal stimulus packages since December, 2008, which included sops for exporters like subsidised export credit and enhanced reimbursement of local duties.
“The contraction is likely to continue in the months up to September this year, since exports recorded fairly high growth rate in the same period of the previous year,” said a government official in the know of the export figures.
“Sectors that have bucked the trend include engineering, pharmaceuticals and plastics. Gems and jewellery and textiles, which had done badly in the last few months, are showing signs of recovery,” the official added.
Indian exports have been contracting since October last year, when the global financial crisis grew in severity following the collapse of Lehman Brothers in September. In the period after that, Indian exports have been in the range of $11 billion to $12 billion a month, against $13 billion to 17 billion in the months between April and September of 2008.
April 2: Exports shrink the most in two decades