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Monday, March 2, 2009

Exports, imports take a knock in January

Exports Dip 16%; Imports Too Shrink 18%

INDIA'S exports tumbled 15.9% in January — its fourth straight monthly fall — and the acceleration in the pace of its decline amid a deepening recession in key markets, such as the US, Europe and Japan, has put into doubt prospects of a near-term revival.
    Economists expect the downward trend to continue for the remainder of the current fiscal and even spill over into the next fiscal.
    "The export figures for February are expected to be on the same lines as the January figures. There is a contraction in world demand and it is obvious that exports will get affected," a senior government official said.
    Merchandise exports fell to $12.38 billion in January against $14.72 billion in the same month a year ago. The hardest-hit sectors include handicrafts, carpets, cotton yarn & fabrics, gems & jewellery, computer software, coal and minerals, oil meals and rice.
    Providing further proof that the Indian economy was slowing down,
imports also moved into negative territory for the first time this fiscal year, falling 18.1% in January, with non-oil imports slipping by 0.5%. The trade data comes close on the heels of weaker third quarter economic growth figures of 5.3% and a 2% drop in industrial production.
    The sharp drop in imports had a flattering effect on the trade deficit, which at $6.07 billion in January 2009 compared favourably with $7.84 billion in the same month a year ago.
    A steep fall in the rupee against the dollar also ensured that January exports in rupee terms were 4.3% higher at Rs 60,460 crore.
    "The magnitude of contraction in trade suggests that the GDP numbers could be as low as 4% in the fourth quarter. There is no reason to believe that the export data will be better in the coming months. The export figures are expected to stabilise around October as the global economy improves," said Rajeev Kumar, director of economic think tank ICRIER.
Oil imports fall 47.5% to $4.46 b
TOTAL exports for the 10 months to end-January rose 13.2% to $144.26 billion. In rupee terms, exports for April to January were nearly 26% higher at Rs 6,45,572 crore.
    The government has already scaled
down its export growth projections for the fiscal year — commerce and industry minister Kamal Nath recently cut the target to $170-$175 billion from $200 billion fixed earlier, although he expressed optimism that the $200 billion target would be met in the next fiscal year. India exported goods worth $162 billion in 2007-08.
    On the imports front, India's oil imports fell 47.5% to $4.46 billion in January, while the drop in non-oil imports was relatively negligible at 0.5% to $13.99 billion. Project goods imports increased by more than 200% in January 2009 and machine tools imports fell more than 35%. Imports of machinery, electrical & non-electrical tools fell 21%.
    "The increase in import of project
goods reflect increase in productive activity taking place in the economy which is a healthy sign," said Nagesh Kumar, director general of RIS, another economic thinktank.
    Non-oil imports for the 10 months to end-January 2009 were valued at $160 billion, up nearly 22%, while the
trade deficit for the period was estimated at $99.1 billion compared with a deficit of $66.83 billion in the yearearlier period.
    According to Saumitra Chaudhury, economist and a member of the Prime Min
ister's economic advisory council, the import figures were also weighed down by a steep fall in imports of gold and diamonds, which have a sizeable weight in import data.
    "I expect the import figures to fall at a faster pace than export, especially in the period between April to September (2009), as global demand picks up," added Chaudhury, who forecasts export to rise to $190 billion in the next fiscal year from an estimated $173 billion this year.




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