Bikky Khosla | 18 Nov, 2019
Contracting for the third consecutive month, India’s
exports fell by 1.1 percent in October. According to data released by the Ministry of Commerce & Industry last week, exports in the month were
marginally down to $26.38 billion from $26.67 billion reported for the
corresponding period of the previous year. On a sequential basis, however, October
exports were higher than $26.03 billion registered in September. Imports too
fell for the fifth month in a row by 16.3 percent, leading to a trade
deficit of $11 billion.
These external trade figures reflect escalating
trade tensions and a slowing global economy. The World
Trade Organization has already downgraded its trade growth forecast for 2019
and 2020. It is now expected that global merchandise trade volumes will rise by
just 1.2 percent in 2019, against 2.6 percent growth forecast previously in
April. The projected increase in 2020 now stands at 2.7 percent, down from the
earlier 3 percent. Additionally, the trade organisation has also cautioned that
downside risks still remain high.
These forecasts show the need to urgently address the
domestic challenges facing the export sector. According to an exporters’ association,
issues like uncertainty over MEIS Scheme, which has resulted in pendency of exporters'
claim for over three and half months. Also, as their GST and Drawback claims
have been held up, the problems have compounded. Similarly, delay in notifying
the RoDTEP scheme with new rates for the products could hamper smooth
transition to the newly launched scheme.
Meanwhile, retail inflation rose to
4.62 percent in October from 3.99 percent in September, breaching the RBI’s
medium-term target of 4 percent for the first time since July 2018. High food
prices played the spoilsport. Growth concerns are already putting a damper on
the economy and now the sharp uptick in consumer inflation has raised concern
that the central bank may not go for a big cut in interest rates in its December
I invite your opinions.