CAD will come down sharply this year: TCA Ranganathan

Q&A with chairman of Exim-Import Bank of India

The turnaround in exports has happened due to diversification into new markets, especially, in Latin America, chairman of Exim-Import Bank of India TCA Ranganathan told Nayanima Basu in his exit interview. Ranganathan, who is superannuating on November 30, also said the current account deficit (CAD) will come down sharply this fiscal. Excerpts: 

 

There is no denying the fact now that it is rupee depreciation that turned Indian exports..

Rupee, undoubtedly, has helped exports. Growth has mainly come from oil exports which have grown by 16% from April-October. But this is also true that the market diversification exercise has definitely helped in greater penetration. This is especially true for Latin America, where our penetration level is more than 1%. Till a year back we were nonexistent there. Besides, programmes like focus market scheme and focus product scheme have been instrumental. 

 

Do you see the trend continuing?

See there is a global factor. There is a recession. For example, within the engineering sector, auto sector had not been doing good, even in Europe. Europe is under stress, same is for US. Despite this our exports have grown. So when world market is going through a rocky time, and if a country’s exports are growing then it is a good sign. Could it be better? That depends on many other factors. 

 

Where do you see trade deficit ending this year now that exports are increasing and imports shrinking? What is your position on CAD?
 

This year trade deficit will come down. This is not only because exports are doing good but also because services are doing well also. So the current account deficit (CAD) should come down sharply. 

 

Coming down of trade deficit is good but shrinking of imports is not a good sign for the economy. Your views?
 

Imports are coming down mainly due to gold. But there is also no denial that economy is also slowing down. Some imports have been shut off cue to Rupee correction which means diversion has taken place from an importer to a domestic producer.