Union Budget 2019: Exports, one of the major engines of economic growth, has been sputtering for a while now. Under the Modi 1.0 government, exports grew by 12.61 per cent amid rising protectionism and a global economic slowdown. In contrast, the Manmohan Singh government in its second term had managed to grow exports by a whopping 69 per cent.
While goods exports largely remained flat under the NDA regime, UPA-II had seen it shoot up nearly 75 per cent. Similarly, services exports shot up 30 per cent in Modi's watch, especially during FY18, but Singh had seen a better growth pace of over 54 per cent.
So, can exports take a turn under Modi 2.0?
The Centre for Monitoring Indian Economy (CMIE) suggests otherwise in its review of the macro-economic performance for May 2019. "Going forward, export growth is likely to remain subdued, owing to the slowing global economy and unresolved trade wars," read its report adding that India's current account deficit (CAD) in FY20 will be a tad lower (year-on-year) at around 2 per cent.
India's exports grew by 3.93 per cent in May to $30 billion on the back of healthy growth in electronics and chemicals shipments. Other sectors that recorded healthy export growth include engineering (4.4 per cent), pharma (11 per cent) and tea (24.3 per cent). However, certain key sectors including petroleum products, man-made yarn/fabrics, gems and jewellery and rice recorded negative growth in May, according to recently released commerce ministry data.
The ongoing trade friction with the US does not bode well for the sector. Hours after US Secretary of State Mike Pompeo landed in New Delhi on a three-day visit, the Trump Administration pushed for fair and reciprocal trade. "There is enormous potential to grow our trade relationship and create the high-quality jobs that Prime Minister Modi wants if India lowers trade barriers," read a State Department Fact Sheet.
The US is India's top export partner, purchasing close to one-fifth of our exports. India's IT services exports to the US alone were an estimated $63.51 billion in 2018. In contrast, in the same year, India's total annual exports to Russia amounted to just $3.23 billion.
Against this backdrop, speculation is rife that Finance Minister Nirmala Sitharaman will address exports revival along with issues such as slowing economy, liquidity crisis in NBFCs and private investments in her maiden budget. After all, as Modi pointed out at the fifth meeting of NITI Aayog's Governing Council recently, the export sector is vital for boosting both per capita incomes and employment.
With PTI inputs