Jan export no dips by 16%, FY09 7.1% GDP target impossible

Indian exports continue to be on a declining trend, contracting by 16% in January. With the dollar trading strong against the rupee, the trade deficit has decreased by 4% in rupee terms in January.

Are exports continuing to dwindle yet again?

This fall was expected, but 16% is the final contraction figure in January. The worrying factor really is that it’s not just oil imports, but non-oil imports have also gone down by 0.5% and this is (YoY). The only silver lining is the upswing in trade deficit. The shift is about 22% in dollar terms (YoY). As far as the rupee is concerned, it is just 4% and that is essentially because the dollar is against the rupee.

What this essentially means is that for April to January, the trade deficit has gone up by about 48% in dollar terms, whereas in rupee terms it has actually gone up by 65% and that gives you an idea of what kind of deficit India is facing ay least from the trade front from April to January.

What this really signifies is India’s imports especially on the capital goods segment are slowing down and that somewhere or the other it will reflect on the IIP numbers and has already reflected in the revenue figures. As these are all micro indicators, India is in midst of slowdown. So that 7.1% growth target that everybody had fixed for '08-'09 seems to be almost impossible at this point in time.