Exports figures - still no reason to celebrate

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Bikky Khosla | 03 Aug, 2010
The newly released export figures have shown a growth of 30.4 percent at $17.75 billion in June compared to $13.60 billion in the same month last financial year. And while some sectors showed signs of an early revival, a few labour-intensive sectors still continue to reel under severe crisis.

Moreover, the growth which we are witnessing based on these latest figures cannot be termed robust as they have still not been able to exceed the level that the sector saw prior to recession. In addition, the prime concern that things have still not stabilised in economies like the US and Europe, doesn't speak too well of the future.

Although the momentum in growth is good news, we must also bear in mind that it is against a low base. For instance if we take May's exports of $16.1 billion, we will notice that it is much less than $18.5 billion registered in May 2008. With the probability of increase in the cost of export credit and with uncertainty in the Euro Zone, I still strongly believe that the labour-intensive sectors need assistance for some more time to come and the government should also consider extending focus market benefits to other European countries.

The export figures of June also show that export of engineering goods, petroleum products, iron ore, gems, precious and semi-precious stones, chemical products has risen significantly. But even though these products are performing well, they are still facing several procedural and transaction problems, which is making a dent in their capital. For instance, shipping costs have increased by more than 40 percent and consignments are lying in the ports due to absence of large vessels compelling clients to resort to domestic procurement. I think our authorities need to look into these hurdles faced by the sector.

Meanwhile, the gloomy story of exports in ready-made garments, textile and man-made fibres remained the same with very little growth owing to less demand from the country's traditional markets. I think although the growth in export as the figures tell us is good news, we are still not in a position to celebrate.