Exports sharply up, but no let-up in imports too

Exports sharply up, but no let-up in

India's exports accelerated to 31.2% in July and to almost 25% during the April-July 2008 period over their respective levels a year ago.
But, imports too maintained their unstoppable momentum, with a year-on-year surge of 48% during the latest month and by over 34% during the first four months of 2008-09.

In the event, trade deficit for July zoomed to $10,798 million from $5,879 million during the same month of the last fiscal; for the four-month period, the trade gap widened to $41,227 million from the preceding year's $27,352 million.

The export effort was partly facilitated by the depreciation of the Indian rupee vis-à-vis the dollar.
This provided an incentive to exporters whose realisation in our currency would thus go up.

Indications are that though the rough weather faced by the American economy has proved to be a dampener in our export performance, this setback has been more than made good by better showing in the Asean, South-east Asian and Latin American markets.
But, with crude prices on the boil for most of the period covered by the foreign trade data, the oil import bill till July 2008 rose by a whopping 54.9% and by a staggering 69.3% in July alone. Translated into simple terms, this means that we must brace for a steep rise in the value of crude imports during the current fiscal, as any softening trend in the months ahead may not adequately compensate the high cost of oil in the first four months.
Compounding the problem posed by high cost of oil imports, the first four months of 2008-09 also saw a strident increase in other imports —- mainly raw materials, capital goods and essential items. Non-oil imports during July were higher by nearly 39% and till July by 25%.
With imports outpacing exports by a sizeable margin, the trade gap remained disconcertingly vast in July 2008 as well as during the first four months.
In other words, there was a further deterioration in the ability of our exports to pay for our imports during this fiscal.
The import-purchasing power of exports fell to 58.9% from 63.5% during the comparable period of 2007-08.
With ample foreign currency assets at our disposal, the imbalance in our external trade ledger may not be a serious problem now but, it does impact on the current account.

But, the trend in exports thus far suggests that we are on course to hit the target of $200 billion set for 2008-09. Already, we have reached $59 billion; since the latter part of the year is usually a period of heightened tempo in the growth of exports, there is even a possibility of surpassing this target.

Source:Sify