INDIA’S exports slid nearly 16 per cent in January, the steepest drop in over a decade, data showed yesterday, adding to a grim stream of economic data as officials announced general elections in April.
The export tumble was another sign that India is beginning to feel the full brunt of the global slump, economists said, and came after figures last week showed the economy growing at its slowest pace in six years.
Economists forecast more bad news ahead as appetite for made-in-India goods slackens with the downturn deepening in the country’s main US and European export markets.
“Key export markets such as the US and Europe are in bad shape with businesses and households scaling back consumption,” said Sherman Chan, economist at Moody’s Economy.com.
Merchandise exports plunged 15.9 per cent in January to $12.38bn (£8.83bn) from the same month a year earlier, the commerce ministry said, marking the fourth straight monthly decline and the biggest percentage fall since mid-1998.
India’s trade performance is of critical concern to the Congress-led government as the export sector is one of the country’s biggest employment generators.
The export dive, underlining the slowdown in India’s buoyant economic expansion, came as India’s election commissioner announced that national polls would be held in stages from April 16 until May 13.
Imports tumbled 18.2 per cent to $18.46bn (£13.17bn) in January, falling for the first time this fiscal year, data showed. Oil imports plunged 47.5 per cent from a year earlier to $4.46bn (£3.18bn) dollars.
Imports are falling because of a “slowdown in industrial production which is growing at close to zero per cent,” as well as a downturn in domestic demand and a fall in global commodity prices, said Crisil principal economist DK Joshi.
Last Friday (February 27), the government reported India’s economy expanded by 5.3 per cent in the third quarter to December, down from 8.9 per cent in the same period a year earlier.
However, the drop in imports helped the trade gap narrow to $6.1bn (£4.3bn) in January from $7.8bn (£5.56bn) a year earlier.
The commerce ministry last week lowered its export target for this fiscal year to March 31, citing the deepening global economic slowdown.
“In an interconnected world, India cannot escape unscathed” from the global recession, commerce minister Kamal Nath said.
India logged 30 per cent year-on-year export growth between April and September last year. But foreign shipments started shrinking in October as the worldwide financial crisis set in.
Nath, however, set an export target for the 2009-10 financial year of $200bn (£143bn), the same as he had initially forecast for this financial year, insisting the outlook would pick up.
The Indian government has announced various measures to try to shield exporters from the slump including cheaper financing and duty refunds.
The Federation of Indian Exporters Association has forecast 10 million job losses in the export sector to the end of March.
