The prevailing economic slow down in the country is expanding its reach to almost every sector of the economy. After the poor figures for quarterly GDP, and the unemployment rate we have got another low this time from the export sector.
The export growth dripped down to 6% in August as compared to the previous year (August 2018). In June this year, the economy saw a record 41-month low growth rate for the export sector. During the first 5 months of the current fiscal, the exports have shrunk to $15. 33 billion coming down by 9%. The only positive to take form the data was that the trade deficit narrowed down to around $13.45 billion in August.
Fall In Imports As Well
Not only exports but the imports have also been hit badly. In the month of June when the exports were at there worst in the past three and half years the imports were on a 34-month low. In June the imports fell by 9% while the trade deficit saw an 8% downfall. Among imports, oil saw a surprise dip of around 9% while the non-oil imports shrunk by 15%.
The fall in export and import growth hinted some serious problems as all the major forex earners saw a dip. Apart from Oil, Gems and jewelry sector continued its downward trend to fell 14% in August. The rise in import duty (2.5% to 7.5%) on cut and polished diamond as announced in the budget this year was cited as one of the main reasons for this continued downward growth trend in the sector. The Finance Minister clarified the government’s stand by saying that the hike in duty was to prevent “round-tripping” of the precious stones as seen in the Nirav Modi scam.
Big players in the sector are demanding tax reduction and more ease of doing business from the government. If that doesn’t happen then it would be difficult for India to maintain its global leadership position in the gems and jewelry sector.
Meanwhile, the union commerce minister Piyush Goel said that he is eyeing 19% to 20% growth in the export sector to hit the target of being a $5 Trillion economy. The government in its budget announced this July gave the vision for making India a $ 5 Trillion economy by the year 2025.