Sluggish global economic growth continued to have its adverse impact on the overseas shipments with exports declining by 9.7 per cent in August to $22.3 billion.
With the domestic economy also showing sign of slowdown, imports also dipped by 5.08 per cent to $38 billion, from $40 billion in August 2011, resulting in a trade deficit of $15.7 billion for the month. The decline in exports comes on the back of decline in the country’s economic growth to a nine year low of 6.5 per cent in 200-12 and industrial production and manufacturing declining.
During August the performance of some sectors with regard to exports are — engineering ($4.6 billion), petroleum products ($4.0 billion), gems and jewellery ($3.4 billion), drugs and pharmaceuticals ($1.2 billion), readymade garments ($0.9 billion). As regards to imports, performance of some sectors are — crude petroleum ($12.8 billion), gold and silver ($2.6 billion), machinery ($2.67 billion), electronic goods ($2.62 billion), coal, coke etc ($1.7 billion).
Commerce Secretary, S.R. Rao said the decline in August was lower than that of the previous month, when the exports contracted by 15 per cent. “Compared to our export performance in July, there is a slight ray of hope. There is a slight improvement in August. I hope this will give us some confidence that we can make up,” he told reporters while releasing the preliminary estimates of August month exports.
He said the incentives announced in the foreign trade policy (FTP) was the reason for this. The government had extended 2 per cent interest subsidy to exports in the policy besides other benefits. “There is a slight ray of hope in August after dramatic fall in July. Reason is that, the FTP incentives that are being announced perhaps are playing out and yielding fruits,” he added.
In April-August, too, the overseas shipment dipped by about six per cent to $120 billion from $127.6 billion in the same period last year. During the first five months of the fiscal, imports contracted by 6.2 per cent to $191.1 billion. Trade deficit during the period stood at $71.1 billion.