Is there a need to be worried about falling exports? No, says the Narendra Modi government.
Falling exports â€” for the 12th month in a row in November â€” dominated headlines in pink newspapers and prompted exporters to demand sops from the Modi government, but the BJP-led NDA regime at the Centre has a different argument altogether.
Citing statistics, the Union Commerce Ministry said on Tuesday the contribution of exports to India's gross domestic product (GDP) has come down from 25.2% in 2013-14 to about 21% in the first half of the current fiscal.
Further, the fall in export of engineering goods by 14% in dollar terms has to be juxtaposed with the rise in IIP data for capital goods that has grown 8.9% between April and October 2015.
The overall IIP growth was 4.8% between April and October 2015, up from 2.2% in the same period last year, signalling an increase in domestic industrial activity.
The fall in exports also needs to be seen in the context of falling crude oil prices, leading to petroleum exports from India plunging by 52%, said the ministry.
Dissecting export statistics further, the ministry says if petroleum product exports are excluded, exports have fallen by 9.6% in dollar terms during the April to November 2015, as against the overall decline of 18.5%.
The cumulative value of exports during the April to November 2015 period was valued at $174.3 billion, down from $213.8 billion during the corresponding period last year.
Taking comfort in the fact that the sharp fall in imports has eased the government's finances, the ministry says the current account deficit at 1.2% of the GDP is far better than 4.8% in 2012-13 when the Congress-led UPA was in power.
Driving home the logic of little impact of falling exports on the Indian economy, the ministry says domestic consumption has more than taken care of growth, reflecting in the first half GDP growth at 7.2% this year.
So, the simple message to all naysayers from the government is: "There is no crisis in India on the export front and while there is a need for caution, there is no need for alarm."