Economic
Highlights
New Delhi, 10 October 2022
World, India Totter:
UN
HOPE HINGES ON
EXPORTS
By Shivaji Sarkar
The critical world situation, a jerky
journey, continuous strengthening of the dollar calls for policy stimulation and rethink on being more
swadeshi for maintaining the fast domestic growth amid predictions of UNCTAD, the
World Bank (WB) and the IMF of deceleration of world and Indian growth process.
The WB says 50 million more Indians slipped below poverty line during the pandemic.
Remedies are not easy and need home grown solutions.
The UNCTAD expects India to grow at 5.7
per cent in 2022, WB puts it at 6.5 per cent from earlier 7.5 per cent and
slashes 2022-23 growth by 80 basis points to 7.4 per cent and the IMF cuts it
to 6.1 per cent for 2023-24. The Reserve Bank of India keeps it at 7 and 7.2
per cent. India’s Chief Economic Advisor Anantha Nageswaran on 20 September
2022, said the Indian economy will grow at over 7 per cent, down from
above 8 per cent projections in January.
Indicators
point to a contraction at global level as the rupee falls below 81 to a dollar,
imports surge and exports fall. The current account deficit is increasing and
chances of exports growing looks not easy. The UNCTAD in its Trade and
Development Report predicted world growth at 0.9 per cent less than the
projections now at 2.6 per cent. It observes 90
developing country currencies weakening against the dollar this year – over a
third of them by more than 10 per cent. It makes trade difficult.
Former Niti
Aayog Vice Chairman Arvind Panagariya agreeing with Nageswaran says that India needs
to grow around 7 per cent, check fall in rupee value and devise how trade grows.
The CEA remains optimistic that it will become the world’s third largest
economy ahead of the UK. His confidence is based on the parameters of the
domestic growth and other favourable pointers. Real GDP grew 13.5 per cent in the first quarter of
2022-23, surpassing the pre-pandemic level by 3.8 per cent. However, private
consumption and investment during July-September in many sectors was sluggish.
Possibly he does not take money circulation into account which has doubled from
about Rs 16 lakh crore in 2016 to Rs 32 lakh crore.
The
international market and the stocks may remain subdued as the Ukraine war, the
politics of sanctions and the energy crisis pose problems for the Euro zone as
also adds to pressures on the US economy. Under its new Prime Minister Liz Truss,
the UK economy following Brexit is going to be raunchy with high inflation,
production issues and sterling losing to dollar.
Internationally
it is not an easy situation. India has to see how imports are reduced and avoid
international purchases like GM farm tech, train rakes and similar other products
that the country’s highly experienced railway sector could produce. The metro
coaches manufactured in the country and the Vande Bharat or T 18 trains
produced by Integral Coach Factory have raised the hopes of the country’s
capability to produce the best. It saves precious foreign exchange, increases
jobs and gives the hope of earning if the country exports such products.
Rashtriya Swayamsevak Sangh (RSS) General Secretary Dattatreya
Hosabale’s comments highlighting India’s poverty, unemployment and inequality
at a Swadeshi Jagaran Manch (SJM) event has virtually been a reminder that if
the country continued with boosting its indigenous production it could solve
many of these problems. The domestic economy has always been strong even during
1970s and 1980s. The country was producing enough to feed its people. That is a
prescription suggested for reducing income inequality.
In January, the Sangh-affiliated SJM, along with seven
other right-wing organisations, has launched the ‘Swavalambi Bharat Abhiyan’ (SBA), is an initiative to spread
awareness among people about startups, entrepreneurship, etc, which aims to
make India unemployment-free by 2030. The latest event, ‘Swawalamban ka Shankhnaad’,
was part of a series of events being organised under the SBA banner. The SJM
has been a conscience keeper even during Prime Minister Atal Bihari Vajpayee’s
time. The BJP has taken Hosbale’s comment, “We should be sad that 20 crore
people are below poverty line and 23 crore people are earning less than Rs 375
a day” in its stride. Whether it means a change in the policy might be a bit too
much to expect but moderation is possible.
It is often touted that globalization
has improved the development of many countries, including India, by creating
economic interdependence among them. Globalization has infused investments but
there also have been high repatriation. Innovation is the key to success for economic growth and
Atmanirbhar Bharat is not anti-globalisation, said Amitabh Kant, CEO, NITI
Aayog two years back.
India without making much fuss has initiated petroleum
imports cut with ethanol blending programme. The government proposes to blend
20 per cent ethanol in petrol by 2025. The average output growth of developing
countries is to reduce by 3 per cent, says UNCTAD and recommends all
governments for tighter regulations for price reductions. India is finding
price control not easy.
It has initiated another move to reduce 40 per cent imports
from China in 36 sectors. India imported around $87 billion worth of goods from
China during 2021 wherein top 10 import product categories comprised around $54
billion. It can reduce imports in 36 sectors including including chemicals,
automotive components, bicycle parts, agro-based items, handicrafts, drug
formulations, cosmetics, consumer electronics, and leather-based goods among
others. But it has also to consider how it can reduce some hi-tech imports
planned for railways, rapid transit systems and such others.
The government has initiated steps to cut imports carefully
to save forex. The exports during April-September rose by 15.54 per cent to
$229.05 billion. Imports increased by 37.89 per cent to $378.53 billion. The
trade deficit during the first six months of the fiscal has widened to $149.47
billion as against $76.25 billion during April-September 2021-22. But Commerce
Secretary BVR Subramanyam expects trade deficit to moderate. Merchandise
exports may range between $470-480 billion compared to $420 billion in 2021-22
and hopes trade deficit to remain at a comfort level.
The export basket has to be widened but in a shaky globe
opening new markets or selling new products remains a challenge. The present
fiscal may not be that easy but if exports could match the expectations, the
rupee may have more stability.
It is tightrope walk. Global conditions remain difficult. September
exports dip by 3.52 per cent. The present fiscal as per UNCTAD will remain
critical. If the export trends improve so may do the rupee. Otherwise the
country may slip into a challenging situation unless the internal economy
improves. ---INFA
(Copyright, India, News &
Feature Alliance)
|