India’s exports contracted for the fifth successive month in February, plunging by 21.7 per cent as policymakers groped for options to sustain growth amid the worst slowdown in the world economy in 80 years.
Exports for January stood at $11.91 billion compared with $15.22 billion in the same month of the previous year, latest trade data released on Monday showed.
They had fallen by 12.1 per cent, 9.9 per cent, 1.1 per cent and 15.9 per cent in the previous four months.
Shrinking world demand has affected India’s handicrafts, gems and jewellery, leather and textile exports severely during the current financial year. Last month the government had announced a slew of measures, including fresh incentives for leather, textiles, gems and jewellery sectors.
Against the backdrop of the slowdown, the government has scaled down the exports target from $200 billion to $175 billion for this fiscal.
But meeting even that seems unlikely as total exports between April and February were $156.5 billion.
Analysts did not expect a turnaround to happen soon. “In 2009, falling exports are projected to offset continued expansion in domestic demand,” the Organisation of Economic Cooperation and Development said in a report on Tuesday.
“With the gradual recovery of the global economy, growth is projected to pick up in 2010.”
In its latest edition of Global Economic Prospects, the World Bank predicted that after a robust eight years, world GDP growth was set to contract by 1.7 per cent this year.
Analysts expect imports to fall faster due to falling commodity prices and the slump in investment demand. “There remains evidence of spare capacity at Indian manufacturing plants in March. Work-in-hand continued to be depleted, contributing to a fourth successive decrease in employment levels,” said Gaurav Kapur, senior economist at ABN Amro.
Imports fell faster than exports, declining by 23.3 per cent in February, with non-oil imports contracting by 10.2 per cent, suggesting that investment activity remains sluggish, keeping demand for capital goods low.
The trade deficit for April-February was estimated at $115.09 billion, significantly higher than last year’s $82.20 billion.