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

Buddhist shrines massively destroyed by Brahmanical rulers in "pre-Islamic" era: Historian DN Jha's survey

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".

RSS' 25,000 Shishu Mandirs 'follow' factory school model of Christian missionaries

By Bhabani Shankar Nayak*
The executive committee of the International Union of Anthropological and Ethnological Sciences (IUAES) recently decided to drop the KISS University in Odisha as the co-host of the World Anthropology Congress-2023. The decision is driven by the argument that KISS University is a factory school.

India must recognise: 4,085 km Himalayan borders are with Tibet, not China

By Tenzin Tsundue, Sandeep Pandey*
There has as been a cancerous wound around India’s Himalayan neck ever since India's humiliating defeat during the Chinese invasion of India in 1962. The recent Galwan Valley massacre has only added salt to the wound. It has come to this because, when China invaded the neighbouring country Tibet in 1950, India was in high romance with the newly-established communist regime under Mao Zedong after a bloody revolution.

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.

Time to give Covid burial, not suspend, World Bank's 'flawed' Doing Business ranking

By Maju Varghese*
On August 27, the World Bank came out with a statement suspending the Doing Business Report. The statement said that a number of irregularities have been reported regarding changes to the data in the Doing Business 2018 and Doing Business 2020 reports, published in October 2017 and 2019. The changes in the data were inconsistent with the Doing Business methodology.

Delhi riots: Cops summoning, grilling, intimidating young to give 'false' evidence

Counterview Desk
More than 440 concerned citizens have supported the statement issued by well-known bureaucrat-turned-human rights activist Harsh Mander ‘We will not be silenced’ which said that the communal riots in Delhi in February 2020 have not been caused by any conspiracy, as alleged by the Delhi Police, but by “hate speech and provocative statements made by a number of political leaders of the ruling party.”

WHO chief ignores India, cites Pak as one of 7 top examples in fight against Covid-19

By Our Representative
In a move that would cause consternation in India’s top policy makers in the Modi government, Dr Tedros Adhanom Ghebreyesus, World Health Organization (WHO) director-general, has singled out Pakistan among seven countries that have set “examples” in investing in a healthier and safer future in order to fight the Covid-19 pandemic.

Tata Mundra: NGOs worry as US court rules World Bank can't be sued for 'damages'

By Kate Fried, Mir Jalal*
On August 24 evening, a federal court ruled that the World Bank Group cannot be sued for any damage caused by its lending, despite last year’s Supreme Court ruling in the same case that these institutions can be sued for their “commercial activity” in the United States.

Top Catholic group wants quota for Dalit Christians, foreign fund licenses revived

By Our Representative
Reiterating its long-pending demand to give "scheduled rights for Dalit Christians”, the All-India Catholic Union (AICU) has regretted that while converts to Sikhism and Buddhism from the former untouchable, or Dalit communities, have been included in the scheduled caste (SC) category, Christians from the identical communities have been “kept out.”