The effort by the commerce ministry to paint a picture of pessimism on the export front despite the sharp pick up in exports in October, to 35.7% in dollar terms and 17.9% in rupee value, by pointing to the continued deceleration in labour intensive sectors, smacks of sheer opportunism to fish in muddy waters and pressurise the government to maximise export sops. Though it would be presumptuous to read too much into one month?s data and expect any sharp reversal in export trends, the concurrent positive changes in other lead indicators (such as the business confidence indices of the RBI and NCAER), point to the possibility of a pick up in the second half of the year. The surge in non-oil imports by 28.8% in October, after registering a fall in the previous month, also reinforces expectations of a rebound in overall demand. The engines are still purring. India?s export growth of 20.9% in April-October 2007 is close to the export achievements of competitors like China (27%) and certainly better than figures posted by South Africa (18.6%), Brazil (16.4%) and Russia (10.5%) in the period April-September 2007.
Given the slow compilation of detailed trade figures, we know little about the most recent developments on the export front, but the figures for the first quarter of the year do not justify the grumbles of the commerce ministry. For instance, the numbers show that exports of agriculture products and mineral ore have also clocked double digit growth, while engineering goods are doing even better, at least in dollar terms. What?s more, the overall trade buoyancy is intact. Exports to key global markets have zoomed during the period under consideration. While exports to Europe grew 24.4%, those to West Asia and North Africa went up by 31.6%, and those to the rest of Africa went up a hearty 81%. Markets to which the dollar appreciation has led to an export slump include America (5%) and surprisingly South Asia (8.4%), as also some important Asean markets (to which exports have even fallen during the period). Yet, observers are advised against jumping to quick conclusions. The diverse performance of exports across the various markets, especially the fall in exports to neighbouring markets, calls for a more realistic reassessment of the actual hurdles to trade. Export sops may not make for effective intervention.
