Though exports growth slowing in November is bad news—compared to October they fell $2.7 billion—for an economy that is relying on exports to boost growth, the larger picture is of a sharp compression in imports and a trade deficit that, at $99.9 billion for April to November, is around a fourth lower than in the same period last year. While some part of this is due to a 30.7% compression in gold imports over the same period, even non-oil non-gold imports have contracted over 6%. That’s good news from the point of view of the rupee but bad news from the point of view of what it says for the economic slowdown and the bottoming out theory.
What is interesting, though, is that were policy to get corrected, exports could just as well rise faster once again. Iron ore exports were down 10% in the first half due to the ban on mining; the share of agriculture in total exports is up from 10% in FY10 to 12.7% in H1FY14; the share of petroleum exports is up from 15.7% in FY10 to 21.2% in H1FY14 and there is a slight pick-up in the share of textiles in total exports, from 9.1% in FY13 to 9.9% in H1FY14. Engineering goods exports share continues to fall, once again pointing to a loss in productivity that will restrict India’s exports growth in all but a few areas.