Govt Assailed For Slump In Export

The parliamentary standing committee on commerce has castigated the government for the slump in the countrys exports during 1996-97 and recommended a white paper on the medium-term export strategy.

Expressing dissatisfaction over the reasons put forward by the commerce ministry for the drop in export growth, the committee headed by Manmohan Singh said unless the growth rate reverted to the earlier levels, the governments export target for the year 2000 were not likely to be met.

The reasons given for the deceleration in exports cannot explain the sharp slump, especially as international demand variations have not been so drastic and widespread, the committee said in its 28th report tabled in Parliament recently.

 

The commerce ministry said international demand factors, including an overall decline in the rate of growth of world trade to five per cent in 1996 compared to eight per cent in 1995 and decline in overall imports of clothing, footwear and leather accessories by leading countries like the US, EU and Japan were the reason for the dip in export growth.

Compared to the export growth rates of 12.27 per cent and 21.38 per cent in dollar terms in 1994-95 and 1996-97 respectively, the growth rate in 1996-97 (April 1996-Feb 1997) dipped to 5.61 per cent. The ministry further said the reduction in permitted export ceilings for rice and wheat in view of tighter supply conditions in the domestic market, high cost of export packing credit, infrastructural inadequacies and avoidable delays in securing export-import related clearance also contributed in the export slump.

The committee, however, felt that the effect of this slow rate of growth on Indias trade deficit and the economy in general would be severe.

Stating that the momentum generated in the exports sector during the last four years seemed to be petering out, the committee urged government to take a serious look at the reasons for this sharp decline in the export growth rates.

Commerce secretary P P Prabhu had informed the committee that while in the case of tea, the exports came down because of low demand from Russia, weakening global coffee prices also adversely affected Indias coffee exports.

While exports of iron ore declined due to external factors, leather and leather goods exports were affected due to non-availability of raw leather in Tamil Nadu, he said adding that the slump in gems and jewellery sector was due to instability in prices.

The committee also drew the attention of the ministry towards the various export promotion zones, which, it said had not been as successful as in the south-east Asian and other countries.

It asked the ministry to take a closer look at these zones to see why they were not attracting the desired level of investment and the reasons for the substantial difference between the number of exporters initially obtaining approvals to set up units and those actually doing so.

On the issue of maximising the countrys gains from the post-GATT trade liberalisation, the committee said government should begin effective preparation on such issues at the World Trade Organisation (WTO) that are of primary concern to India.

These include labour standards, trade and environment related issues, problems of market access for exports of the developing countries and investment and competition policies, it said adding that government should work out a coherent strategy in consultation with other contracting parties.

On the issue of dumping, the committee said government should strengthen its anti-dumping mechanism and all cases must be completed speedily.

It also recommended that the Centre should work out a phased programme for removing quantitative import restrictions and also called for a strategy for ensuring competitiveness of Indian small scale industry without relying on import controls.