It may be recalled here that Indian cotton yarn fetched on an average of $3.13 per kg in December 1997. This shows the decline in net realisation in cotton exports by around 8.94 per cent over December 1997.

Even this comparison may not reveal the full story. Actually some quota holders who were seen running around to exhaust their unutilised quotas are said to have finally shipped cotton yarn at around $2.74 per kg indicating a loss of 12.46 per cent compared with price levels in December 1997. The main reason for this situation seems to have been that some quota-holders did not spread their shipments over the year in a planned manner. They sat on their allocations until the quota year was about to end and then rushed toexhaust their quotas to avoid penalties. This could be done only at substantially lower prices.

By doing so, they might have escaped punishment for non fulfilment of quotas, but in doing so they inflicted penalty on the national exchequer by accepting a reduction in foreign exchange earnings (low price realisation).

Though exports of cotton yarn from the country during the April-December 1998have totalled 361.34 million kg they have been lower by 3.06 per cent compared with the same period last year. However, foreign exchange earnings from exports of yarn and sewing threads during the period have fallen by 12.52 pe cent to $1,066.23 million from $1,218.22 million in the same period of the earlier year.

This has adversely affected the working of a number of spinning mills in the country.During the seven-month period from April-October 1998, as many as 63 additional spinning mills have rolled down their shutters and the number of small spinning units that might have done so might be so much larger, thoughofficial figures in that regard are not available. Profitability of these units that are still in operation has been severely eroded.

It may not be surprising therefore, if some of the spinning units that are still in operations come to a grinding halt in the coming months, unless export markets revive and the domestic offtake of cotton yarn picks up.

So far as the overseas markets are concerned, the situation is none too encouraging. East Asian markets which absorbed nearly 46 per cent of our cotton yarn shipments are still passing through a financial crisis. To top this, there are persistent fears that China may devalue its currency. Though these rumours have been denied by the Chinese authorities that has not brought any comfort tot he East Asian countries. Continuance of such fears may however, prevent stability in those economies.

Meanwhile, the economic growth rates of these countries is in the reverse gear and unemployment is growing. Even those who are able to retain their jobs have to acceptremuneration cuts.

All this is bound to exert more pressure on the purchasing power of the people. On the other hand, in view of the need to keep their economic wheels moving these countries are resorting to cut-throat competition taking advantage of their depreciated currencies. The recent fall in the exchange value of the Brazilian currency has added a new twist to the situation.

While we may not face direct competition from Brazil, it is quite likely that it may be able to offer its textiles to the neighbouring Latin American countries. These may not be costlier to it and may tend to decline. Those who find it difficult to export to Brazil might try to unload these into other markets. If that happens that may further complicate textiles markets in the world which are already facing subdued conditions at present.