Disturbances in the Middle East and Euro zone financial crisis worrisome
The Economic Survey on Friday said that roll back of the stimulus measures for the export sector will not have much of an impact on the growth of overseas shipment but it cautioned against disturbances in the Middle East and the Euro zone financial crisis.
According to the Survey, there is a need to remain vigilant about any fallout from the financial turbulence in the Euro zone and the new disturbances in the Middle East. It said that the slowdown in import growth from October, 2010 and a rise in exports from November, 2010 helped bridge the trade gap.
It said the outlook for India's trade has brightened with good growth of 29.5 per cent during the April-December 2010-11 period. Imports grew by 19 per cent during the period.
“Current indications are that India will not only achieve the target of $200 billion but surpass it in 2010-11. The gradual withdrawal of stimulus measures by India and other countries is not likely to adversely affect India's rising exports,” the Survey said. It said the deceleration in the net surplus of services trade is a ‘cause of worry' on the current account deficit. It warned that rising inflation could erode agricultural exports.
Hit hard by the global slump in demand in 2008, the government had provided several stimulus measures to boost the country's exports, including a 2 per cent interest subsidy, tax benefits and many market and product-linked incentives. After exports start reviving, the government in the last Budget had withdrawn some benefits.
During the April-December period of the current fiscal, outbound shipments grew by 29.5 per cent to $164.7 billion. Imports stood at $246.72 billion, as against $207.31 billion over the same period in the previous year. The trade deficit stood at $82 billion, marginally higher than $80.13 billion in the corresponding period in the previous fiscal.
The Survey said the country needs to focus more on engineering sector exports, which contribute over 20 per cent to total merchandise shipments.
On services exports, it said that India is moving towards services-dominated export growth.
Keywords: Economic Survey