May exports shrink 29%, more interest aid on cards

India’s exports contracted for the eighth successive month plunging 29.2 per cent in May compared with a year ago as policymakers grappled the worst slowdown in the world economy in more than six decades. HT Correspondent reports.

India’s exports contracted for the eighth successive month plunging 29.2 per cent in May compared with a year ago as policymakers grappled the worst slowdown in the world economy in more than six decades.

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Exports for the month of May totaled $ 11.01 billion, down from $15.55 billion in the same month of the previous year, trade data released on Wednesday showed.

Imports fell faster than exports declining by –39.3 per cent in May compared with a year ago, with non-oil imports contracting by –25.4 per cent, suggesting that investment activity continues to remain sluggish, keeping demand for capital goods low.

Shrinking world demand has affected India’s handicrafts, gems and jewellery, leather and textile exports severely during the past few months.

A worried government is planning a series of fiscal and monetary measures, including a possible cut in interest rates, for embattled exporters struggling to stay afloat amid shrinking world demand

Officials, who did not wish to be identified, said the government could announce interest rate subsidy of at least one percentage points for bank credit to leather manufacturers, marine products, textiles and handicrafts in the full budget for 2009-10 that would be presented next Monday.

If implemented, the additional interest rate subsidy would be over and above the two percentage points offered earlier in credit to these sectors.

Growth in gross domestic product worldwide, after a robust eight-year stretch, is now set to contract by a modest 2 per cent this year, the World Bank predicted in its latest report titled “Global Development Finance 2009: Charting a Global Recovery.”