Exports rise 36% in April, govt says it’s base effect.

NEW DELHI: Exports in April clocked a 36% growth y-o-y on back of higher demand for Indian gems & jewellery, textiles, petroleum, oil & lubricants and engineering, but the shipments were way below what the country managed two years ago indicating a slow pace of recovery in key overseas markets.

“Don’t get carried away by the growth. The huge bump up is pure base-effect,” said commerce secretary Rahul Khullar, pointing to fresh challenges ahead. A key concern here is how the European Union countries will shape up in the coming months as the debt crisis in Greece continues to cast a shadow.

Imports went up by 43.3% in April 2010 fuelled by growth in manufacturing and increase in domestic demand. Exports in April 2010 at $16.9 billion is much higher than exports worth $12.4 billion in April 2009, but is below the previous April’s level of $18.5 billion.

The base-effect that Mr Khullar pointed to notwithstanding, the latest figures show that crucial sectors that were hit most by the slowdown such as gems & jewellery and textiles were picking up globally.

“Recovery in the US is far from gung-ho and the situation in Europe is still not stable. If the Greece contagion spreads to other countries, what can you do?” Mr Khullar said. Exporters’ body Fieo’s director general Ajay Sahai said the government should constantly review the progress in Euro zone to take timely action if required. “If the crisis does not extend beyond Greece, then we are well on our way to achieve the $200 billion export target set for the year. But if it spreads, then the government has to strategise and take action to help exporters,” he said.

Imports continued to rise in April 2010 touching $27.3 billion with high growth posted in sectors such as gems & jewellery, organic chemicals, iron & steel, non-ferrous metals, machinery, transport goods and project imports. Although it is lower than the peak of $30 billion in April 2008, the growth is encouraging, Mr Khullar said.

“The import growth is riding on industrial recovery, exports recovery and growth in domestic demand,” he said.
Trade deficit during the month increased to $10.4 billion in April 2010 compared to $6.7 billion. As long as the deficit remains in the $10 billion level, it is not a concern, the secretary said.

Source : The Economic Times