India’s exports contracted fby 14.8% — the steepest fall in three years — as orders continue to dry out from Europe, which is hit by sovereign debt worries and a wobbly political situation.
Shrinking shipment orders have implied that exporters have not been able reap the benefits of a weakening rupee, which touched record lows in the recent past. A persistently weak rupee, however, has made imports costlier, widening the trade and current account deficit — a worrying sign for an economy that is slowing.
“We hope that there will be a turnaround by ... September-October... we hope that we will be able to bring about a positive improvement and enter a strong positive territory,” Anand Sharma, commerce and industry minister, said.
This is the third contraction in as many months. Exports fell 5.45% June to $25.06 billion, on the back of a 4.16% contraction in May.
India’s economic growth crashed to 6.5% in 2011-12, and 5.3% during January to March this year, the worst in 9 years. Costly borrowing and inputs have downed the shutters on investment activity, as firms defer capacity expansion, bringing down job prospects.
“The world trade contraction is getting worsen. The worst fears of a European sovereign debt crisis is really impacting the world trade,” commerce secretary SR Rao told reporters.. In the US markets also, the appetite has substantially come down... Days coming ahead are going to be tough.”