Good augury

The phenomenal growth of Indian exports in 2010-11 is a sign of the strong rebound of the economy from the troubled times of global recession. The 37.8 per cent growth in dollar terms, compared to the previous year, is unprecedented and is perhaps a sign of greater momentum building up in the economy. Comparison with last year may give an inflated picture because it had a low base. But even in comparison with earlier years, the performance has been remarkable. The annual target of $200 billion has been exceeded and trade deficit has fallen to 6 per cent of the GDP. Increasing deficits arising from faster growth of imports in relation to exports had been a cause of worry because of its impact on currency and exchange reserves. But fast -rising imports might allay some apprehensions on these counts.

It is not only the volume of exports but its structure and the nature of the emerging trade relationships that should be reason for greater optimism. Engineering exports rose by about 85 per cent. Items like transport equipment, textiles and iron and steel have seen more than 60 per cent growth in exports. The rise in exports of many unconventional goods shows the changes taking place in the economy. Exports of emerging economies have been growing faster than those of developed countries after the recent slowdown. India’s performance is part of the trend but among emerging countries also India has done better than others, except China. While increasing trade is a sign of the recovery of all economies, greater trade among developing countries shows that the recovery and growth impulses are stronger in these countries. Indian exports to Latin America grew by more than 100 per cent and those to Africa rose by over 40 per cent. These are good auguries. The increasing geographical diversification of trade is good for stability. Diversification provides good insurance against possible volatility in trade arising from economic or other reasons.

China has always done better than India in exports. But it should be noted the growth in India’s exports is not with the help of an exchange rate which is artificially kept low, as in the case of China. China’s exchange rate policy is designed to boost its exports. The 2010-11 export trend should be sustained in coming years through increased production, infrastructure development and more congenial policies.

Liked the story?

  • 0

    Happy
  • 0

    Amused
  • 0

    Sad
  • 0

    Frustrated
  • 0

    Angry