Indias commodity trade ably weathered the storms that hit Asian economies in 1997 and industry officials and analysts expect the new year to be equally good for the trade, if not better.
The coming year will be a situation of status quo, if not better, but it cant be bad, O P Goenka, president of the Central Organisation of Oil Industry and Trade told Reuters.
He said April-September monsoon rains had been sufficient, cultivation on time and feedback on crops encouraging.
Also Read
India had a 10th successive normal monsoon in 1997, with the El Nino weather factor that adversely hit several South-East Asian economies leaving the country virtually unaffected.
Indias foodgrain output in 1997/98 (July/June) is expected to be 199.14 million tonne, up from the previous years 198.17 million tonne, the Centre for Monitoring Indian Economy (CMIE), an independent Mumbai-based think-tank, said this month.
The countrys agriculture enjoyed hefty growth of 5.8 per cent in 1996/97 because of a jump from lower production in 1995/96, when foodgrain output was 185 million tonne.
India increased its wheat stocks in 1997 through better procurement and imports. Its rice crop was satisfactory after a good southwest monsoon, but exports hit a rough patch due to a drop in the value of competing Asian nations currencies.
Anil Adlakha, Executive Director of the All India Rice Exporters Association, said that given a good monsoon India should export about 2.0-2.2 mt of rice in 1998/99.
Analysts said that despite political uncertainties, India did not experience any shortfalls in essential items and domestic prices remained under control.
Overall, the markets have been quite stable because of better domestic production and exports. The consumer was the king in 1997, there was no shortage of any commodity and prices have been stable, said one Mumbai-based analyst.
He said in 1997 the governments priorities were consumer, farmer and industry, in that order. It was too early to say if this would change, he said.
Goenka said political instability and a change in the value of the rupee might have only a limited impact. The rupee has fallen about nine percent against the dollar since mid-August.
The trading community is accustomed to this political instability, said Goenka. There is no reason for panic.
He said edible oil prices in the domestic market had firmed up recently as imports of palmolein had become expensive, but prices had been stable through the year.
Sharad Parikh, president of the Bombay Metal Exchange, said in 1997 the domestic metals market had been plagued by a fluctuating currency and low demand. We expect 1998 to be a good year for non-ferrous metals. The automobile industry, cables and copper industry will do better from mid-January, he said. The political climate will also be better.
M L Damani, president of the Bombay Bullion Association, estimated gold imports in 1998 at around 600 tonne, mainly due to a fall in gold prices.