Skip to main content

GST, demonetization, red tape "squeezing" India's exports, as imports continue to soar, warns British "Economist"

India's exports as % of GDP
By Our Representative
Influential British weekly, "The Economist", has regretted that India's exports, which had reached a whopping 25% of Gross Domestic Product (GSP) in 2013, quadrupling since 1991, not far from the global average, thanks to the liberalising reforms which "helped integrate India into the global economy", this year they have reached the "lowest level in 14 years", around 17-18% of the GDP.
Pointing out that this has forced economists "to ponder why India has been unable to boost exports even as the global economy has purred along", the top weekly says, "In the 12 months to March 2018, $303bn of Indian goods ended up overseas. That was up on the previous year, but still short of the $310bn achieved in 2014, when the Indian economy was a quarter smaller."
It adds, "Imports, meanwhile, have increased to $460bn, pushing the merchandise deficit to $157bn last year, up from $109bn in 2016-17 and its highest level in five years. A surplus in services such as IT outsourcing helps reduce the overall trade deficit by around half, but even there imports are growing faster than exports."
Asserting that India's central bank, Reserve Bank of India, even today "holds enough foreign reserves to pay for nearly a year’s worth of imports", "The Economist" warns, "India’s current-account deficit ... is expected to reach 2% of GDP this fiscal year, triple last year’s reading", adding, "Gold imports, used for saving or jewellery, have their own unpredictable rhythms, but also deepen the deficit."
Suggesting that things have worsened because of oil prices, the weekly says, "The current trade lull extends beyond gold and oil, however. Exporters across the economy are being squeezed by the poor implementation of a goods-and-services tax (GST) that came into force last July."
It adds, "Perhaps 100bn rupees ($1.5bn) of refunds due to exporters once they can prove they have shipped their wares abroad is being held up by sclerotic administration. That is working capital which small-time exporters cannot easily replace."
"Worse", "The Economist" says, "A $2bn suspected fraud by a diamond dealer in February has resulted in regulators banning certain types of bank guarantees that exporters use to ensure they get paid promptly, exacerbating their funding problems. These snafus come as many firms are still recovering from the ill-advised 'demonetisation' of November 2016, when most banknotes were taken out of circulation overnight."
Noting that the move "snagged local supply chains, giving foreign rivals opportunities to fulfil orders that would have gone to hobbled Indian firms and to gain market share in India itself", the weekly underlines, "Those woes come on top of perennial frailties", especially "crippling red tape".
Lamenting that, meanwhile, the Government of India is still "unwilling to enact labour and land-acquisition reforms that might foster larger firms", the weekly says, instead, "it is trying to shield industry from foreign competition." Thus, "In recent months it has imposed tariffs on a dizzying array of goods, from mobile phones to kites. Though those will no doubt help stymie imports, it is just as likely that trade measures imposed by other governments will hobble India’s exports."
Especially taking on Modi's friend US President Donald Trump, the weekly says, it is India’s misfortune that the US "has multiplied the salvos against India, whether decrying supposed export subsidies, making it harder for Indian IT workers to get visas or accusing India of artificially weakening its currency." Thus, it adds, "Unlike many American allies, India has not been exempted from imminent steel tariffs."

Comments

Uma said…
Sab ka saath, sab ka vinaash

TRENDING

Astonishingly sycophantic: Ex-Gujarat topcop on 2002 Godhra riots probe panel report

By Rajiv Shah  In a scathing critique of the 2002 communal riots inquiry commission report, released by the Gujarat government in December 2019 five years after it was submitted, the State’s former topcop RB Sreekumar has said that it “unequivocally” and “meticulously” takes care “to refrain from probing and taking cognizance of any deviant action of omission and commission by the State administration, particularly those operating in the criminal justice system, who facilitated extensive mass violence and enabled brigands to perpetrate anti-minority crimes.”

Swami Vivekananda's views on caste and sexuality were 'painfully' regressive

By Bhaskar Sur* Swami Vivekananda now belongs more to the modern Hindu mythology than reality. It makes a daunting job to discover the real human being who knew unemployment, humiliation of losing a teaching job for 'incompetence', longed in vain for the bliss of a happy conjugal life only to suffer the consequent frustration.

Two of 12 top caste-based sexual violence cases from 'model' Gujarat: NGO report

By Rajiv Shah   The National Council of Women Leaders (NCWL), a civil rights group, has compiled what it has called “landmark cases of caste-based sexual violence” between 1985 and 2020 to mark the first anniversary of the notorious Hathras gangrape case, which led to the death of a young Dalit woman in September 2020.

Riddled with Brahmanical mindset, India's health care 'serving' corporate interests

By Vidya Bhushan Rawat*  In this second part of my conversation (click here for first part), Dr Manisha Bangar speaks about the health crisis in India how the government is trying to privatise things, and where our response during the Corona period was lacking. She also gives us an understanding of people opposing nutritious meals for children in the mid-day meal.

Buddhist shrines were 'massively destroyed' by Brahmanical rulers: Historian DN Jha

Nalanda mahavihara By Our Representative Prominent historian DN Jha, an expert in India's ancient and medieval past, in his new book , "Against the Grain: Notes on Identity, Intolerance and History", in a sharp critique of "Hindutva ideologues", who look at the ancient period of Indian history as "a golden age marked by social harmony, devoid of any religious violence", has said, "Demolition and desecration of rival religious establishments, and the appropriation of their idols, was not uncommon in India before the advent of Islam".

Ram ke naam? Upper caste Hindus 'created' the demand for temple in Ayodhya

By Sahil Mital*  Documentary filmmaker Anand Patwardhan brought an important issue to the forefront with ‘Ram ke Naam’ (In the Name of God). At a time when religious fundamentalism and fanaticism is on the rise, this movie brings to light the reality behind the thought process of people involved, both inside and outside such issues.

Hard times? Seeking to promote Urdu amidst 'efforts' to brand it as language of Muslims

By Firoz Bakht Ahmed*  Those who believe that Urdu is a dying language, must come to the National Council for Promotion of Urdu Language (NCPUL), spend some time here and see that Urdu, like any other language, is on a fast track. For the connoisseurs of Urdu, it is a heaven!

Power supply lines in Thar 'pushing' Great Indian Bustard to extinction: Researchers

By Rosamma Thomas*  Electricity supply lines pose a huge risk to birds and affect biodiversity, but there is little research about the numbers of birds dying of such collision in the tropical nations. In August 2021, academic journal Biological Conservation carried the results of a survey conducted in 2017-18 on 4,200 sq km of the Thar Desert in Jaisalmer district of Rajasthan. This was the first comprehensive survey of this nature in the region.

Bahujan patriarchy? Savarna feminists 'over-state' gender rights in Dalit communities

By Vidya Bhushan Rawat*  Dr Manisha Bangar is a practicing senior consultant gastroenterologist and transplant hepatologist, with around 20 years of clinica-cum-research and teaching experience. In terms of her medical qualification, she completed MBBS, MD and DM. She was a governing council member of the Indian National Association for Study of the Liver (INASL), and member of the Task Force for Hepatitis B and Non-Alcoholic SteatoHepatitis (NASH) diseases of the South Asian Association for Study of the Liver (SAASL).

Vindictive raids? Centre 'retaliates' after Delhi govt child rights body's clean chit to ex-babu

By Our Representative  Over 700 academics, advocates, activists, civil servants, writers, film makers, journalists, musicians and artists have condemned the raids by the Enforcement Directorate (ED) on the offices and private home of top IAS bureaucrat-turned-human rights and peace activist Harsh Mander, stating, the aim is nothing but to “harass and intimidate” him.