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Indian exports will bounce back, asserts Exim Bank chief

The deceleration in the current export scene was a temporary phase due to constraints arising from both supply and demand side constraints but the long-term prospects for India on the export front were positive.

This was stated by Y B Desai, managing director, Export Import Bank of India, while inaugurating a workshop on Sustaining 20 per cent Growth.

It was only as recently as in 1991-92 that India witnessed a negative growth of one per cent in exports, improving only marginally to over 3 per cent growth in the subsequent year 1992-93.

But unlike in the early 1990s, today India exports have acquired greater diversity and resilience to absorb any slowdown which may be experienced on the export front, said Desai. This was supported by the foreign exchange reserves being close to $30 billion.

Desai stated that currency depreciation makes exports attractive and imports costlier. This is particularly true in the short run. However, exports may not benefit from such devaluation if higher inflation rate raises input costs and India's competitors also depreciate their currencies.

During the 12 months August 1996 to July 1997, most of the international currencies and currencies of the neighbouring countries depreciated against the US dollar, whereas the Indian rupee remained stable during this period. With the exception of pound sterling, other major currencies depreciated against the US dollar in the range of 7 per cent to 18 per cent.

According to Desai, the competitive advantages for India are the large domestic market, globalisation of manufacturing process, India becoming a production base for multinational companies and multilateral funded projects overseas, and cost effective professional expertise in the areas of computer software development, design engineering services, plant operation and maintenance service and financial and managerial services.

Desai referred to the paradigm shift not only in the external sector of the economy, but in the other sectors of the economy as well. Indian exports can bounce back to double-digit growth, he said, provided we analyse and understand the forces behind the paradigm shift and devise adequate responses to meet the new challenges and overcome bottenecks coming in the way of export growth.

UNI