An equally worrying matter for the Government is the 5.84 per cent negative growth in imports recorded in July compared to the same month last year. The months May and June saw exports notching up a growth of 11.68 per cent and 11.14 per cent respectively over the corresponding months in 1998-99.

Cumulatively, the exports in April-July 1999 grew by only 4.04 per cent compared to the same period last year. The growth was far below the 6.50 per cent level recorded in April-June 1999 and 6.09 per cent in April-May 1999.

According to the provisional foreign trade data released by the commerce ministry on Wednesday, exports during July are valued at $3.05 billion as against $2.99 billion in July 1998. In rupee terms, the exports were 3.79 per cent higher at Rs 13,209.25 crore than the value of exports during July 1998.

During April-July 1999, the exportsare estimated at $11.041 billion against $10.61 billion in the previous corresponding period. In rupee terms, the exports grew by 8.45 per cent during this period.

During the above period, the imports are estimated at $14.07 billion, up by only 1.01 per cent from the level of $13.93 billion. Oil imports at $2,754.53 million are 51.05 per cent higher than last year's valued at $1,923.58 million. The sharp increase is in line with the rising trend in world crude prices.

On the other hand, non-oil imports at $11.31 billion are 6.53 per cent lower than last years imports of $12.10 billion.

The trade deficit in April-July 1999 stood at $3,029.87 million down from the level of $3,317.97 million in April-July 1998.

The commerce ministry has fixed an export target of 11 per cent for the 1999-2000 fiscal over the previous year based on a study conducted by the Indian Institute of Foreign Trade.

Reacting to the figures, MR Madhavan, analyst with the ICICI Securities and Finance, said the decline in non-oilimports has been stemmed to some extent which supports the hypothesis of an economic recovery. The trend of a slight improvement in exports continues.

Pradeep Srivastava, chief economist, National Council of Applied Economic Research, said exports have not picked up very much. It is not a surprise as you would expect exports to pick up very gradually with much stiffer competition from Southeast Asian economies which are now recovering.

The rupee is overvalued, which handicaps the kind of exports we do-- leather, handicrafts--which are very price-sensitive. If there is any over-valuation, it will hurt exports, Srivastava said.

The next government needs to review the reservation policy for small businesses. There is a lot of overlap between our export activities and the small scale sector. The industrial policy needs to be harmonised with our trade objectives.

Aashish Pitale, head of research, JP Morgan, said that the biggest worry in the data is the oil imports. With oil prices going up we couldexpect this kind of rise but a rise of 50 per cent in April-July is quite staggering, he said.

Going forward the oil prices have been higher in August which will lead to further rise in oil imports. This will widen the trade deficit, he said adding that non-oil imports, which is a fair indication of economic recovery, are not really picking up.