But consider what happened to exports the last time there was a downturn in the economy. 2001-02 was the last fiscal when exports declined compared with the previous fiscal.

In that year, total exports amounted to $43.8 billion (about Rs2.2 trillion), 1.6% lower than exports in the previous year. It’s a long way to go from the current 23.7% growth year-on-year to a contraction of –1.6% for the full year.

Also, the magnitude of the global downturn this year is much worse than what happened during 2001-02. The JPMorgan Global Purchasing Managers’ Index (PMI) for manufacturing, for example, was down to a record low of 36.4 last month. (Any reading below 50 denotes a contraction.) The lowest level it fell during the last downturn was 40.8 in October 2001, after the attack on the World Trade Centre in New York. If the PMI is any criterion as an indication of the health of the global economy and therefore the potential for exports, this time the fall is likely to be much more than that in 2001.

Moreover, India’s exports fell even more in 1998-99, when they declined by 5.1%. That was after the Asian crisis. This time, it’s not only Asia that has been affected but the whole world, so the impact is likely to be worse.

A recent report by Merrill Lynch says: “India appears least exposed to global demand among Asian countries… Even so, our ML-Liq India model indicates that zero export growth—exports actually declined in 1998 and 2001—is sufficient to pull growth down (by about) 150 basis points. Industry should bear the brunt of the slowdown because it is largely export oriented. Knock-on effects will likely impact consumption, construction and trade and transportation segments in services."

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