Mumbai: “Impacted by the global turmoil, exports fell for the nine month in a row in June, but there are early signs of recovery in overseas sales, which could regsiter growth from September onwards,” a finance ministry official said.
Senior economic advisor in the finance ministry H.A.C. Prasad based his hypothesis on the sequential growth witnessed by exports in May and June.
“While exports growth compared to corresponding month in previous year continues to be negative for the ninth month in a row, exports growth in June 2009 over May 2009 is positive at 16.4%. This is in continuation of the positive month over month trend in May 2009 (of 2.4%),” Prasad said.
Hit by global financial crisis India’s exports started contracting from October onwards on yearly basis, even though it managed 10.4 per cent growth in September, when the global financial crisis deepened after Lehman Brothers collapsed.
“If this trend (positive growth on monthly basis) continues till August 2009, the export growth could also be positive after that as the base effect will be felt from September 2009 as export growth was low in September 2008 and negative after that,” Prasad said.
India’s exports fell by 27.7% in June to $12.81 billion in June from $17.73 billion in the same month last year.
However, in May exports declined to $ 11.01 billion, down 29.2% year-on-year.
As such, sequentially there is a growth of about 16.4%.
However, Prasad hastened to caution that it is too early to come to any conclusion about export growth.
“The next two months are deciding months. We have to see whether there will be real recovery in trade sector or only changes due to the base effect for the coming months,” he added.
However, Federation of Indian Export Organisations (FIEO) director-general Ajay Sahai said that the declining trend is likely to continue for some more months.
The exporters’ body acknowledged that the government cannot increase demand in the global markets but it should give incentives to exporters so that they do not lose orders.
“The government should take short-term measures first and then come out with long-term policies after the global commerce shows improvement,” Sahai said.
The Government is slated to unveil Foreign Trade Policy, which spells out the segments of priority in external trade and also gives incentives and disincentives, depending on the country’s needs.