The Economic Survey 2017-18 has brought out the sharp disparity among states on interstate and international trade, with just five — Maharashtra, Gujarat, Karnataka, Tamil Nadu and Telangana — accounting for 70 percent of India’s total exports. The Survey has for the first time included data on international exports of states and asserts that they indicate a strong correlation between export performance and the standard of living. States that export internationally and trade with other states have been found to be richer.
Last year, the survey had estimated that India’s inter-state trade in goods was between 30 and 50 percent of GDP. But GST data suggest that India’s internal trade in goods and services, excluding non-GST goods and services, is even higher and is about 60 percent of GDP. The GST regime was implemented in India from July 1, 2017.
“The conventional wisdom is correct: a state’s Gross State Domestic Product (GSDP) per capita is highly correlated with its export share in GSDP (for the 20 major states that were analyzed). The one major outlier in the chart is Kerala, but only because it is a large recipient of remittances. If remittances are added and created a broader globalization index for states, Kerala may not be an outlier,” the survey noted.
When it comes to inter-state trade, the five largest exporting states are Maharashtra, Gujarat, Haryana, Tamil Nadu and Karnataka. Also, in case of inter-state trade, the five largest importing states are Maharashtra, Tamil Nadu, Uttar Pradesh, Karnataka and Gujarat.
As per the inter-state trade data’s analysis, the survey drew two conclusions: the states that export the most are also the ones that import the most, and the states that trade the most are the ones that are most competitive and run the largest trade surpluses.
India’s exports are also unusual in that the largest firms account for a much smaller share of exports than in other comparable countries. The top one percent of Indian firms account only for 38 percent of exports, unlike in other countries where they account for substantially greater share — 72 per cent in Brazil, 67 per cent in Mexico, 68 per cent in Germany and 55 per cent in the US.
“There is one caveat which could help explain the atypical Indian distribution: unlike in other countries, Indian data includes exports of services, where concentration ratios tend to be much lower than in manufacturing,” the survey said.
It noted that the implications of such an “egalitarian” Indian export structure are unclear. “The evidence cited earlier argues in favour of superstars (big export firms), because they are dynamic and their expansion can have spillover effects on other firms. But concentration can have disadvantages, including impeding competition,” it added.
The top five per cent of firms accounted for 91 per cent, 86 per cent, 91 per cent and 74 per cent of international exports in Brazil, Germany, Mexico, and USA, respectively. India’s top five per cent of firms account for 59 percent of exports.
According to the survey, the logistics industry is worth more than $160 billion and has grown at a compound annual growth rate (CAGR) of 7.8 per cent during the last five years. The sector provides employment to more than 22 million people. The Global Ranking of the World Bank’s 2016 Logistics Performance Index shows that India jumped to 35th rank in 2016 from 54th in 2014 in terms of overall performance.
Source: indianexpress.com