India’s exports contracted for the fourth successive month in January, plunging by 15.9 per cent from the same month a year ago. Policy-makers are groping for a way out amid the world’s worst economic crisis in the last 80 years, with no result visible yet from incentives and support handed out to exporters so far.
Merchandise exports in January stood at $ 12.38 billion compared with $14.71 billion a year ago, government data showed on Monday.
Exports had declined by 12.1 per cent, 9.9 per cent and 1.1 per cent year-on-year in the previous three months.
Shrinking world demand has affected India’s handicrafts, gems & jewellery, leather and textile exports.
Last week, the government announced a slew of measures including fresh incentives for leather, textiles and gems and jewellery sectors.
The government has scaled down the export target to $175 billion for the current fiscal year from the earlier target of $200 billion, and set a hopeful $200-billion target for 2009-10.
Analysts expect no early turnaround.
“The slowdown in exports and non-oil import growth is consistent with the view that economic activity is likely to moderate further. While exports are likely to remain weak in the next two quarters as external demand remains subdued, we expect imports to fall faster due to falling commodity prices and the slump in investment demand,” said Sonal Varma of Nomura Financial Advisory Services.
Imports, however, fell faster than exports, declining by 18.2 per cent year-on-year in January. The sharp decline in crude oil prices was the primary reason behind the slump in oil imports that accounts for 24 per cent of total imports. Oil imports fell by 47.5 per cent in January.
In addition, non-oil import growth fell by 0.5 per cent in January, suggesting that domestic investment activity continues to remain sluggish, keeping demand for capital goods low.
The trade deficit for April-January 2008-09 was estimated at $99.1 billion compared with a deficit of $66.83 billion during April-January 2007-08.
In recent months the government has taken a slew of fiscal measures, including sharp cuts in excise duties and increased plan spending, to help the economy tide over the recession in the world's developed countries.