New Delhi: India’s exports and imports surged in April, reflecting robust growth in industrial production, but commerce secretary Rahul Khullar cautioned exporters on Wednesday to be prepared “for the worst” in case contagion spreads from the debt crisis in Greece.
Merchandise exports expanded 36.3% last month to $16.9 billion (Rs77,740 crore) from $12.4 billion a year earlier. Imports increased 43.3% in the same month to $27.3 billion from $19.1 billion in the year-ago period.
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Khullar, while releasing the data, said the numbers were nothing to get carried away by.
“The huge bump in growth is purely due to a base effect,” he said. “Exports are still running below export levels in 2008.”
In April 2008, before the onset of the financial crisis in the West that slowed export demand, India’s exports earned $18.5 billion. Imports in the same month cost $30 billion.
After 11 months of contraction, exports swung back to positive territory in October last year. India’s exports declined by 4.7% to $176.6 billion in 2009-10 from a year ago. The commerce ministry has targeted $200 billion exports this fiscal.
“We should learn to live with low growth rate. To expect 30-35% growth rate is a pipedream,” Khullar said.
World markets are in turmoil again amid fears of contagion spreading from debt-ridden Greece to the rest of Europe despite a nearly $1 trillion bailout package for the continent put together by the European Union and the International Monetary Fund this month.
“We don’t know how Greece will pan out. If the contagion spreads, God forbid, then what do you do? I hope for the best but (we) have to be ready for the worst,” Khullar said.
Khullar cautioned against volatility in the rupee, which fell 1.68% against the dollar, the most in 15 months, to 46.3550 per dollar on Wednesday. The rupee had been appreciating in the early part of the year before the European crisis caused a flight of investors.
“When the currency is this volatile, it is prudent to hedge your risks,” Khullar said.
The trade deficit is manageable as long as it remains around $10 billion, according to Khullar. In April, the deficit was $10.4 billion. India’s trade deficit declined in 2009-10 to $102.1 billion from $118.4 billion in the previous year as imports fell due to a slowing economy.
Imports are rising because of the recovery in industrial production to meet rising local and export demand. Federation of Indian Export Organisations president A. Sakthivel said the robust growth in imports is “an indication of complete revival of manufacturing sector, which will further facilitate exports in months to come”.
Gem and jewellary exports increased 36% in April while handmade fibres (34%), textiles (30%) and petroleum products (80%) also posted robust growth. Exports by the engineering sector which had been contracting grew 16% in April.
The import surge was led by fuel (70%), gems and jewellary (118%), organic chemicals (44%), iron and steel (141%) and non-ferrous metal (50%). The increase in imports of petroleum products was both a price and quantity effect, said Khullar, adding that most other goods were either intermediate products for exports or for domestic consumption.