Economic Survey says India's trade prospects has brightened in 2010

Posted By: Staff
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New Delhi, Feb.25 (ANI): The Economic Survey for 2009-10 presented by Finance Minister Pranab Mukherjee in Parliament on Thursday has revealed India's share in world merchandise exports after remaining unchanged at 1.1 percent between 2007 and 2008, reached 1.2 percent in 2009 (Jan-June) mainly due to the relatively greater fall in world export growth than India.

As a result, the outlook for India's trade sector in 2010 has brightened with prospects of recovery in world output and trade volumes.

The World Bank has forecast real GDP growth rates of 2.7 percent and 7.5 percent for the world and India respectively for 2010 and growth in world trade volume of 4.3 percent and 6.2 percent in 2010 and 2011 respectively.

The International Monetary Fund (IMF) has projected growth of 3.9 percent and 7.7 percent for the world and India respectively.

The world trade volume growth projections are also higher at 5.8 percent and 6.3 percent in 2010 and 2011 respectively.

This is a remarkable improvement compared to the fall in world trade volumes by 12.3 percent in 2009.

An analysis of the month-wise exports for India from 2008 onwards indicates a recovery in trade with export growth becoming positive in November 2009 over November 2008 at 18.2 percent.

The downside risks for world and Indian trade lie in the fact that though the fall has been arrested both output and trade recoveries are still fragile given the fact that the recovery has been pumped up by the stimulus given by different countries including India.

India which has admirably weathered the present economic crisis, however, need not be unduly worried, says the Economic Survey. Instead it could lead from the front by taking bold steps toward reforms as it did in 1991 on the back of the balance-of-payments crisis.

Special Economic Zones (SEZ) continue to function as engine for economic growth supported by quality infrastructure, complemented by an attractive fiscal package, both at the central and State levels and with the single window clearance mechanism. To encourage exports by States, outlay under the assistance to States for developing export infrastructure and allied activities (ASIDE) scheme has been increased.

In the Indian case, while in the short-term relief and stimulus measures have worked, some fundamental changes are needed. For the merchandise sector these include furthering tariff reforms by lowering the peak duties; weeding out unnecessary customs duty exemptions and streamlining export promotion schemes to reduce duty foregone; further reduction in excise duties to make exports and industry competitive; giving special attention to export infrastructure; fine tuning the trade strategy by targeting exports of dynamic products to developed markets and employment-intensive non-dynamic products to developing country markets; and continuing with our pro-active role in multilateral trade negotiations while taking care of livelihood concerns and the needs of the domestic sector.

In services sector, a more conducive environment for trade can be created by liberalising FDI in some of the services.

Along with systematic marketing of services, collection and dissemination of market information by setting up a portal for services and streamlining the services data system could help the services sector in making further strides. (ANI)

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