Exports In 11 Months Exceed Year’s Target By $8.2 Billion.

India’s exports rose an impressive 49.7 per cent in February over the previous year, the highest growth in any month in the fiscal year that has just ended, allaying fears about the high trade and current account deficits. Exports in the first 11 months of 2010-11 exceeded the annual target of $200 billion by a good $8.2 billion, which also represented an increase of 31.4 per cent over the year-ago period.

Merchandise exports in February stood at $23.5 billion compared with $15.7 billion in the corresponding month a year ago, trade data released here on Friday said. Export sectors that have performed well during the month include petroleum (34 per cent growth), engineering products (81 per cent), electronic goods (40 per cent) and cotton yarn (43 per cent).

In January, exports had grown 32.4 per cent. Commerce secretary Rahul Khullar said that going by this trend, the country’s exports in 2010-11 would be $230-235 billion, and imports $350 billion, and the trade deficit $105-115 billion. What has given an impetus to exports is a turnaround, albeit slow, in the developed markets, as also a growth in demand from Asian and Latin American markets, as Ramu Deora, the president of apex exporters’ body Fieo, put it.

Imports of goods grew much slower at 21.2 per cent in February to reach a total of $31.7 billion against $26.1 billion in the previous year. Total imports in the first 11 months of the fiscal grew 18 per cent to $305.2 billion from $258.7 billion. Owing to the higher exports growth, the balance of trade was estimated at $97 billion compared with $100 billion during the same period of the previous year.

Khullar had earlier said that the government expects exports to touch the $225 billion mark by the end of the calendar year. Trade analysts said that the commerce ministry’s decision to diversify export markets and the product basket has proved to be fruitful. In fact, last month commerce minister Anand Sharma released the draft paper which aims to double exports to $540 billion by the end of 2014.

DK Joshi, principal economist at Crisil, said the lower trade deficit would reduce the burden on the current account deficit, which is current hovering around the 3 per cent mark. “Overall, the export numbers are good because the current account deficit could be addressed. However, the growth seen over the last few months is not sustainable and would be around 15-20 per cent over the next months,” he said.

Joshi said the government must take cognizance of two important developments on the trade front.

Source : indianexpress.com