Mumbai, Feb 6: For a long time now, a myth has been propagated in this country - state governments do not benefit from exports. Exports do not earn sales tax. Hence it is not a revenue earner. Why should the state governments focus and actively support export? That exports is a key contributor to economic growth of a country is an established fact. However, how relevant is it to the state economies?The Mumbai-based Business Consulting Group has submitted a report to the Federation of Indian Export Organisation, southern region, which clearly establishes the dependence of the southern state economies on exports. For instance, in Tamil Nadu the contribution of the manufacturing sector to the net state domestic product at 21 per cent is among the top end in the country (only below Maharashtra & Gujarat which are at around 30 per cent). The key sectors of Tamil Nadu's manufacturing output are significantly dependent on exports. Textile products account for about 20 per cent of the manufacturingoutput.
However, it has never been highlighted that nearly 25-35 per cent of this textiles and textile products output from Tamil Nadu is exported. Because of this sector's exports and its global competitiveness, the state also has a dominant domestic market share of 35-50 per cent of the yarn and hosiery markets of the country. Thus exports from just one sector, has become key to about 4-6 per cent of the Tamil Nadu economy.
In Andhra Pradesh, the share of manufacturing sector is lower at around 13 per cent of state domestic product. Pharmaceuticals which account for nine per cent share have export dependence to the extent of 40 per cent of production.
Even agriculture and allied services which are key to the state's SDP have a strong export dependence : tobacco - 42 per cent, aquaculture - 90 per cent, chillies - 19 per cent, etc. These sectors also have dominant market shares in the domestic market by virtue of their global competitivenss.
In Karnataka - the software industry of the state has beenmainly responsible for the 7.0 per cent growth of the services sector of the state economy. In Kerala, spices, cashew and marine products are important to the agricultural sector of the economy. In all these cases, exports and the consequent global competitiveness of the sector are also repsonsible for dominant domestic market shares of these sectors. This results in further growth of the state economy.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
