Exports are on recovery path, says the Centre

Exports are on recovery path, says the Centre

There are now early signs of recovery in overseas sales indicating growth soon

Senior Economic Advisor in the Finance Ministry H A C Prasad based his hypothesis on the sequential growth witnessed by exports in May and June.

“While exports growth compared to corresponding month in previous year continues to be negative for the ninth month in a row, exports growth in June 2009 over May 2009 is positive at 16.4 per cent. This is in continuation of the positive month over month trend in May 2009 (of 2.4 per cent),” Prasad told PTI at a seminar on India International Jewellery Show here.

Hit by global financial crisis India’s exports started contracting from October onwards on yearly basis, even though it managed 10.4 per cent growth in September, when the global financial crisis deepened after Lehman Brothers collapsed.

Positive trend

“If this trend (positive growth on monthly basis) continues till August 2009, the export growth could also be positive after that as the base effect will be felt from September 2009 as export growth was low in September 2008 and negative after that,” Prasad said.

India’s exports fell by 27.7 per cent in June to US$12.81 billion in June from US$17.73 billion in the same month last year.

However, in May exports declined to US$11.01 billion, down 29.2 per cent year-on-year.
As such, sequentially there is a growth of about 16.4 per cent.

However, Prasad hastened to caution that it is too early to come to any conclusion about export growth. “The next two months are deciding months. We have to see whether there will be real recovery in trade sector or only changes due to the base effect for the coming months,” he added.

FIEO differs

However, Federation of Indian Export Organisations (FIEO) Director-General Ajay Sahai said the declining trend is likely to continue for some more months.

The exporters’ body acknowledged that the government cannot increase demand in the global markets but it should give incentives to exporters so that they do not lose orders.
“The government should take short-term measures first and then come out with long-term policies after the global commerce shows improvement,” Sahai said.

The Government is slated to unveil Foreign Trade Policy, which spells out the segments of priority in external trade and also gives incentives and disincentives, depending on the country’s needs.

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