This is by no means an ambitious target. Even so, it has been greeted with skepticism in the light of the dismal export performance last year and the year before. Last year's export growth, officially estimated at 3.7 per cent, was woefully short of the initial growth target of 20 per cent, and even of the revised target of 15 per cent. True, exports grew by 10 per cent plus in March 1999 over the low base of March 1998. It will be simplistic to assume that last March's growth will be sustained as a matter of course. However, it is just possible that Hegde took the March rate as indicative of what is feasible this fiscal. Recent business confidence surveys have also projected optimism on exports in the first half of the year. And 10-11 per cent export growth is consistent with a GDP growth of 5.5 - 6 per cent. A higher GDP growth will require exports to rise by 14-15 per cent inUS dollar terms.

India's exports have not been as bad as appears in US dollar terms. In volume terms, growth has been fairly respectable. The trouble was a fall in unit value realisation (or a slack in export prices) and measurement of exports in strengthening US dollars. Expectations now are that the recovery of the east Asian economies will make a difference this year. Yes, they might import more from India, but they will bargain hard over prices because their currencies have taken a heavy depreciation. For this very reason, India will also find them tough competitors in third country markets (West Asia, Europe and the United States). Unit values of Indian exports will remain under pressure. Unless the Indian rupee weakens more than it has so far--post-Kargil it might -- exports will not gather bounce.

However, exchange rate depreciation by itself will not do the trick. Many Indian exports (textiles, chemicals and pharmaceuticals, gems and jewellery, etc) face non-tariff barriers. India has hardlyprogrammed for new manufactures. Liberalisation is premised on organised Indian industry and multinationals providing the driving force for industrial diversification and export; but large houses remain net foreign exchange spenders and the focus of the multinationals (unlike in China) is on the domestic market. Their export-orientation remains weak. Besides, India's small and medium industries, which a have strong presence in exports, are on the retreat; deprived of adequate capital (a consequence of financial reform), many have been unable to push through technological upgradation, and not a few have downed shutters. There are basic structural weaknesses in Indian industry--large, medium and small--retarding industrial growth and, consequently, export growth. Unless these are addressed, exports may show double-digit growth one year, only to falter in the next.