Ever since our country opened up its economy to the world, the number of exports have risen. The growth of the country has been directly benefitted from the strong export sector. The process of Globalisation has been very beneficial for our country, to help it realise its strong export potential. Currently, there is a huge demand for our domestic goods in the world and therefore has led to the establishment of many businesses and enterprises. Moreover, the exports bring a lot of foreign exchange to the country which helps the country to make reserves. Thus, we can easily see why exports are called the saviour of the economy.
Condition of economy after pandemic:
The COVID-19 pandemic has been very devastating for every single country. Our country, due to its inefficient management suffered a lot and failed miserably in containing the virus. This led to less economic activities and therefore overall contraction in the GDP of the country.
The export sector suffered a lot during the initial stages of the pandemic. Borders of all countries were closed and there was no international trade between countries, hence putting a pause on the exports. However, with the start of the revival of the economy after the restrictions were lifted, the export sector started to grow again. The export sector of India grew consecutively for four quarters with the number of key items witnessing a huge growth in outbound shipment as compared to the levels in the pre-pandemic.
The much-needed revival of the export sector has been very beneficial for the economy. The export sector achieved the level of $93.5 billion in the April to June quarter, the first quarter of this year which was 17% higher than the same period during 2019, the pre-pandemic era. Comparing this to the previous year’s level when the whole country was under lockdown, the current level is 86% higher. Imposing a lockdown was very necessary during the last year to curb the spread of the virus, but it surely affected the economic growth of the country.
Talking about the calendar year, the exports so far settle at $185.2 billion which is 11.1% more than the level of exports in the calendar year 2019. This clearly indicates the revival of the export sector of the country.
According to the report of Credit Suisse, the trailing 12-month exports hit an all-time high in the month of June. This subsequent growth has resulted in the rising non-oil and non-gold exports rising by 16% using this measure, according to the report. There has been a constant rise in the export of these commodities.
The president of the Federation of Indian Export Organisation, A Sakthivel said that the global demand for Indian goods has remained buoyant. Even during the second wave of the virus, the factories and big industries were operational at 50 per cent labour strength which led to the rigid demand for these exports. Moreover, the country is now witnessing a decline in the number of daily cases as well as the reduction in the mortality rate, the exports can hit an all-time high in this financial year. The setback in the export during the initial stages of last year has created a greater demand for the exports this year.
Top benefitting categories
All the commodities were benefitted from the rising export levels, however, some of them gained a lot more than others. This is major because of the demand for these goods in the international markets
Of the total top ten principal merchandise exports, which contribute to three fourth of total outbound shipments, seven saw a rise in the value of exports from January to June 2021 as compared to the pre pandemic level, that is in the year 2019.
Talking about the quantitative terms, the electronic goods have seen the sharpest rise sharpest rise in the level of export, rising by a big 30 per cent. It is followed by the rice shipments which rose by 25.7% leading to a sudden surge in agricultural exports. These two sectors have alone contributed to 3.6% and 2.8% respectively to the total merchandise exports in the January- June 2021 period.
Moreover, about the heavyweights in India’s principal exports, engineering goods, which contributes to one fifth of the total exports, rose by a huge percentage and reached the level of $49.7 billion in the January-June 2021 period.
According to the reports of the Engineering Export Council, engineering goods achieved a record high level of export in the April-June 2021 quarter, which surely is a piece of great news for our economy. With the recovery of the international market, the demand for digitalisation has been on the rise and has led to the rise in the export of engineering goods and has the potential to exceed the $100 billion in the financial year 2021-2022 for the first time ever. While engineering goods have a big international market, the US remains the biggest market for the export of engineering goods.
However, not all the large categories have been performing better than the pre-pandemic levels of 2019, some of them have failed to outperform.
With the rising level of petrol, the export of petroleum products have been very less and the level of growth is flat. Moreover, the exports of gems and jewellery are still down by 7.5%. However, in the last two months, the export of petroleum products have shown some growth, providing hope for recovery. However, the gems and jewellery export are still down.
Talking about medical goods, the growth of exports of drugs, pharmaceuticals and organic as well as inorganic chemicals has been very strong.
However, this better than ever growth in the export sector of the country was much needed, it may not able to completely compensate for the weakness in the local economy caused by the pandemic majorly because of the relatively small share of the external trade in the gross domestic product of India.
The goods export-GDP ratio is about 10-12% in recent years, which is much less than the level of 2012 when it was about 16%. Moreover, the level of growth of the export sector this year will completely depend on the fare of the countries that India trade with. Currently, the major share of the export destination lies with the United States. The rising exports have given a lot of positive hopes for the revival of the economy, and the rising number will surely help our economy.
Edited by Karishma