The Economic Survey 2018, tabled by Finance Minister Arun Jaitley in Parliament on Monday ahead of the Budget 2018, has revealed that merely 1% of export firms account for over 38% of exports, but also explains why it may not be a bad thing.
The Economic Survey 2018, tabled by Finance Minister Arun Jaitley in Parliament on Monday ahead of the Budget 2018, has revealed that merely 1% of export firms account for over 38% of exports. Calling the phenomenon of firms accounting for a disproportionately large share of exports as ’emergence of exports superstars’, the survey noted why it is an ‘egalitarian exceptionalism’, and what can be understood as monopoly may not be a bad thing.
“It is argued that having and fostering bigness influences the sectoral composition of exports and also helps create comparative advantage and improve long-term prospects. This is in contrast to the more conventional, Schumacherian view that argues for the virtues of smallness, especially small and medium enterprises,” the survey said. Exports superstars are dynamic and their expansion can have spillover effects on other firms, argued the survey, but did not rule out its disadvantages, including impeding competition.
The survey, however, said that India’s exports are unusual as the largest firms account for a much smaller share than in other comparable countries. New findings on the firm level concentration of exports in India show that than in the US, Germany, Brazil, or Mexico. “The top 1 percent of firms accounted for 72, 68, 67, and 55 percent of exports in Brazil, Germany, Mexico, and USA respectively but only 38 percent in the case of India,” it added.
Data on the international exports of states (the first in India’s history) suggests a strong correlation between export performance and states’ standard of living. Five states—Maharashtra, Gujarat, Karnataka, Tamil Nadu, and Telangana—in that order account for 70% of India’s exports.