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India : Tapering stimulus will hurt exports, says Khullar (August 18, 10)

India : Tapering stimulus will hurt exports, says Khullar

Export growth will slow in the second half of this year due to a fall in the aggregate demand in developed nations, largely on account of a calibrated withdrawal from the stimulus, the Commerce Secretary, Dr Rahul Khullar, said on Tuesday.

"Those heady days of 25- 30 per cent per annum growth in exports are over. We have to get used to a slower rate," he told presspersons.

To add to this, rich countries are looking to increase their exports to developing countries to offset their contraction in domestic absorption and to increase their GDP growth, rather than importing more from the latter, he said.

SLOWEST SINCE NOV

Meanwhile, exports in July grew 13.2 per cent to $16.24 billion, the slowest since November 2009. This was mainly due to the base effect being "wiped out," Dr Khullar said.

Thanks to the low-base effect, export growth in this fiscal was robust in April (36.3 per cent), May (34.2 per cent) and June (30.4 per cent).

Leather, man-made fibres and yarn, readymade garments, tea, handicrafts, electronics and rice saw a contraction in growth in July.

Pointing out that exports this fiscal so far (April-July) grew by 30.1 per cent to $68.6 billion, Dr Khullar said the target of $200 billion is achievable even at a steady export growth of 15 per cent from now on.

NEW MARKETS

Mr A. Sakthivel, President, Federation of Indian Export Organisations, said the export growth is largely attributable to the growing shipments to Africa, Latin America, West Asia, and Asia.

Imports in April-July period grew by 33.3 per cent to $112.2 billion. The trade deficit has grown to $43.6 billion.

Imports in July were $29.17 billion, up 34.3 per cent, while trade deficit was $12.93 billion.

The Foreign Trade Policy supplement, expected to be announced on August 23, is likely to provide sops for sectors in the red including the labour-intensive ones such as leather, ready made garments, tea and handicrafts.


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