In a sign of rising demand in the economy, merchandise imports to the country dipped to just 2.6% during November, the least in the last 11 months, to $22.9 billion. This happened in a month when exports rose 18.2%? the first growth in 13 months?and stood at $13.19 billion. Significantly, the gross domestic product of the country had expanded at a better than expected rate of 7.9% in the three months to September on a strong show by industry and services sectors.
Exports and imports had plunged through the year as overseas markets shrunk and appetite for foreign goods declined in the economy in the backdrop of the global economic crisis. The trade deficit?difference between exports and imports?in November stood at $9.7 billion, which was 21.26 % less than the year-ago month.
The rate of contraction in imports had reached 39.2% in May, but recovered to minus 15% by September. The low rate of contraction in November was attributed to an increase in oil imports, which expanded 7.3% to $6.38 billion. In the eight months to November, oil imports contracted 34.4% and stood at $50.18 billion.
Non-oil imports continued to remain weak, though were better off than previous months. Data showed that in November, import of non-oil merchandise like raw materials and capital goods stood at $16.5 billion, which is 6% lower than the year-ago month. Between April and November, non-oil imports were valued at $120.24 billion, a contraction of 23.8%.
The higher traction in exports is yet to make the commerce ministry feel comfortable, as the rise in November was mostly on the base effect?exports had contracted 13.5% in November 2008. ?Let?s not go overboard about the latest export numbers. It is mainly due to a base effect as exports had hit rock-bottom in the same month last year,? commerce secretary Rahul Khullar had said recently. Nevertheless, exports have been progressively improving from May 2009, when it had contracted 38.9%.
According to Khullar, India?s exports are likely to be in the range of $165-$170 billion in 2009-10, provided the remaining four months to March have exports of $13-14 billion. ?Exports should stabilise in the fourth quarter,? Khullar had said.
Exports have been improving across sectors from the beginning of this financial year, though they remained in the negative territory until October. In November, exports of petroleum products rose by about 85% and stood at $2.4 billion, which added to the rise in the overall exports basket. But non-oil exports like leather, textiles and handicrafts saw much lesser traction in November, growing 4.8% at $10.8 billion.
Exporters are elated at the rise in exports but are lobbying for the continuation of export sops. ?This (export growth of 18.2%) is a clear indication of the adaptability of exporters, and, of course, the positive impact of the stimulus extended by the government. FIEO hopes that the government will continue with the stimulus, particularly subvention of the interest rates for exports as interest rates are set to move upward,? said A Sakthivel, president of the Federation of Indian Export Organisations.
The commerce ministry is to review the impact of various export sops that were doled out in the last one year. The exercise could lead to the rationalisation of sops ? sectors doing well could see a toning down of sops while that are yet to recover could get additional support.