Plunging exports on the back of drying shipment orders from Europe has been a drag on India’s overall growth, the finance ministry said on Friday.
“Regardless of the causes (of drop in exports), the effect has been a drag on growth. This drag has been about 1.0 percentage points even relative to last year,” the Mid-Year Economic Analysis said.
India’s exports have declined for 12 straight months due to weak global demand. In November, they were down 24% compared to the corresponding month in the previous year.
The services sector has also thrown up a mixed picture, especially in the wake of slowing exports markets, the Mid-Year Economic Analysis said.
Services sector, which is one of the best performing, grew at 8.9% and 8.8% in the first and the second quarter of 2015-16 respectively, pushed by financial, real estate and professional services.
However, in the January-September period, growth in foreign inbound tourists decelerated to 4.6 % leading to lower foreign exchange earnings, which decreased by 1.5 %. “This indicated not just lower growth in numbers but also a fall in tourism receipts which could also be attributed to lower spending by tourists or increase in share of low spending tourists in arrivals,” it said.
What is also worrisome is that the world services export growth has moved to a negative zone in 2015. India’s tourism exports growth was in double digits in 2014 in terms of tourist arrivals, which also pushed foreign exchange earnings.