Putting positive export figures in perspective

The good news on the export front is that India is set to cross the targeted $400 billion in 2021-22 and the Modi government has something to smile about. Of course, the exports must be seen in the context of imports. The import bill for 2021-22 is $589 billion, with a trade deficit of $189 billion. Of course, the positive story is when export earnings are more than import payments. And, there is the further complication that many of the export earnings are through imports. For example, a significant part of the export earnings is through petroleum products, which in turn, depend on the import of petroleum crude.

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There is, of course, no need for Prime Minister Narendra Modi, Finance Minister Nirmala Sitharaman and Commerce Minister Piyush Goyal to place things in perspective. The increase in the export earnings is a good thing because it shows that the domestic economy is looking outward. Indian exports constitute 20.1 per cent of the GDP, while imports comprise 23.1 per cent.

The countrywise import-export statistics for April-January 2021-22 reveal an interesting profile of India’s global trade. India exported 18.73 per cent of its petroleum products to the United Arab Emirates (UAE), while its crude import from the UAE was 9.98 per cent and petroleum product import 20.16 per cent. India’s petroleum product export shows that 53.95 per cent is to Singapore and 40.29 per cent to the Netherlands, while its crude imports are majorly from Iraq (24.34 per cent) and Saudi Arabia (18.27 per cent), and its imports of petroleum products are from Qatar (24.86 per cent), the UAE (17.8 per cent) and Saudi Arabia (11.38 per cent).

The import of electronics components, telecom instruments and computer hardware peripherals reveals interesting facts. India imports 46.02 per cent of electronics components from China, 19.89 per cent from Hong Kong and 7.84 per cent from Singapore. In telecom instruments, the imports are from China (45.62 per cent), Hong Kong (15.92 per cent) and Vietnam (11.08 per cent). For computer hardware and peripherals, India’s imports from China are 53.99 per cent, Hong Kong (13.25 per cent), and Singapore (12.3 per cent).

India exports 10.09 per cent of its gold and other metal jewellery to the UAE while it imports 13.07 per cent gold from there, apart from the imports of 45.04 per cent of gold from Switzerland and 7.45 per cent from South Africa. It also imports 31.39 per cent of the precious and semi-precious stones, and exports 21.33 per cent to the UAE. India exports 65.05 per cent of the precious and semi-precious stones to Hong Kong and 19.06 per cent of gold and other metallic jewellery.

The big picture is not too simple and it shows that big and small countries, at least in terms of the market economies, depend on one another to boost their export growth.

In political messaging, these statistics cannot be given any play. What matters most is the total figure, and it is much better to foreground the exports figure more than those of the imports. The government cannot be faulted for it. Prime Minister Modi’s pep talk during the 87th edition of Mann Ki Baat on Sunday noted that from being vocal about local, India could go from local to global.

But various trade segments show that it is not as simple as that. Much of what goes for local cannot go global through exports if there are no imports and if there is no demand in the world. Goyal had assured the export councils that the government would handhold the exporters and improve the ease-of-doing-business facilities much more. India has not yet tapped its traditional strengths. It should be doing much better in the textiles sector. But we seem to export cotton ($2.013.48 million) more than textiles, T-shirts etc of cotton ($1,402.55 million). But these discrepancies will sort themselves out.

We need to, however, check the details because as we all know, the devil is in the detail. The fact that nearly a quarter of the GDP is from exports is a good sign. But unlike the smaller countries, India will not be able to make it good on the economic front on the strength of exports alone. The domestic economy is larger, and it must do well too.

With an inflation rate of a little over the mandated limit of 6 per cent, the home front is under stress. The general wisdom is that if the growth rate keeps ahead of the inflation rate, then you need not worry too much. The thinking behind the assumption is that growth incidentally fuels inflation and, therefore, the inflation rate in a growing economy is not a worrying factor. But India’s growth rate is yet to gather momentum though it is more than the pre-pandemic year of 2019-20.

If the Prime Minister and his ministers loudly proclaim the good part of the news, it is a good thing. But we need to keep a check on the other aspects. For example, employment figures are important signs of the health of the economy. The Centre for the Monitoring of Indian Economy (CMIE) shows that the unemployment rate on March 26 is 7.6 per cent. The figures show the stress points in the economy, and it would not be safe to ignore them.

Of course, there is the grand paradox: the tax collections are buoyant through the stressful Covid interregnum and its aftermath. The direct tax collection stands at Rs 13.63 lakh crore and the GST collection at the end of February was Rs 15.50 lakh crore. So, when 900 million people pay taxes, direct and indirect, the government can sit back and boast.

The economic stresses of the people do not matter. So, we must grin and bear the insensitivity of the government as it announces that free ration would be extended by another six months. A distressed population accepts the generosity of the proud government with gratitude. The State marches on as the people lie low and think of nothing beyond survival.