The double digit growth in exports in dollar terms for two successive months this year over the corresponding periods last year should not spark off unwarranted euphoria. The trend has to be tracked for some more time to determine whether the growth is sustainable, or a mere spike due to relatively transient factors such as the overheating of US economy which has triggered off a higher level of consumption being satisfied largely through imports from developing countries. There's no cause for cheer on other fronts either since no one would consider export-growth today as a barometer of that much-awaited industrial recovery, given the fact that this sector accounts for barely 9-10 per cent of GDP. For a country like India growth in this sector should indicate a tapering off of recession. But factor in the substantial petroleum imports and the fact that oil prices have risen by $20 a barrel in value terms) and the `feel good' feeling subsides.Now, there is little cause for cheer in these figures except that there are more signs of export growth now than there were 15 months ago when the rupee was depreciating-which perhaps shows that the current uptrend is to some measure due to the right strategies, thrust and perhaps to some degree price competitiveness as well. But there is a need to improve the competitiveness of India's exports if we have to ensure consistency.
To do this, we have to identify what is making us non competitive-high labour costs per unit triggered off by low productivity and high transaction costs and finally, industrial recalcitrance such as the ongoing transport strike (which should have exempted trucks carrying export cargo). Otherwise, this will be the proverbial flash in the pan.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.
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