ISSN 2222-1905 (Paper) ISSN 2222-2839 (Online)
Vol 4, No.16, 2012
Effect of Economic Indicators on Export Performance of
India: Pre and post Liberalisation period
Nilanjana Kumari, Research Scholar
Faculty of Commerce, Banaras Hindu University, Varanasi, U.P., India-221005
The research is financed by UGC NET JRF, Reference no. [F.15-9(JUNE 2010)/2010 (NET) UGC-Ref. No.:710/ (NETJUNE 2010)]. The paper examines the export growth affected by various economic indicators (GDP, IMPORTS, PERCAPITA NET NATIONAL INCOME, BALANCE OF PAYMENT, EXCHANGE RATE & INDUSTRIAL PRODUCTION), using data from 1986 to 2011. The paper studies the relationship between exports and indicators by using Karl Pearson’s coefficient of correlation and multiple correlation. t – Test helps to study the significance of relation. Diversification of India’s exports is depicted through the export import ratio. The paper concludes that the exports are mainly affected by three indicators (GDP, IMPORTS & PCCNI), and the change in policies should be made in accordance with them. Key Words: Export, GDP, Import, Pre and Post Liberalization Period. Introduction
Indian economists and policymakers have shown a considerable participation to accelerate the growth of exports since independence. Exports since independence have increased from ₹ 606 cr. in 1950-51 to ₹ 1142649 cr. in 2010-11 with a subsequent increase in imports from ₹608 cr. to ₹ 1683467 cr. in 2010-11. India’s trade regime has seen a sea change since liberalisation and exports have shown a consistent rise thereafter. Subsequently world trade has also seen a rising trend since 1970 with 0.6% share of India in 1970 and 1.5% of share in 2010.India’s exports although having an increasing trend have always faced a deficit trade balance. The liberalisation policy in 1991 helped India to recover from a deficit BOP position and outstanding external credit assistance.
In the present scenario both India as well as world trade has shown a downfall due to rising inflationary pressures, global recession and the escalating euro crisis. However, with an expected decelerating world trade volume growth of 3.8%, IMF is trying to moderate the growth projections with limited policy options, and is expecting a growth of 1.2 % in 2012 of advanced economies and a rate of 5.4% of growth in 2012 of emerging and developing economies. India has seen a 5 to 7 fold increase in exports since last decade recording 44.6 billion US $ export in 2000-01 to 251.1 billion US $ in 2010-11. The CAGR noted was 8.2% in 1990’s which increased to 19.5% in 2008-09, however merchandise exports showed a negative growth of -3.5%.
India’s exports which had surpassed not only pre-crisis levels but also pre-crisis trends have started feeling the heat of this second global downturn which has come in quick succession to the first, though the country was in a better position than many others to handle it. During the first half of 2011-12, India’s exports witnessed a high growth of 40.6 per cent. However, since October 2011 there has been a deceleration in export growth as a result of the crisis originating in the periphery of the euro zone area and spreading to the core economies resulting in an evident mild growth. Exports registered a high growth of 61.1% in July 2011. After that growth decelerated to 41.5 %, 25.2 %, and 18.1 % in August, September, and October 2011 respectively. Cumulative exports were at US $242.8 billion, registering a growth of 23.5 % during 201112 (April- January). During April- December 2011, the export sectors that have done well are petroleum and oil products registering a growth of 55 %; gems and jewellery 38.5 %; engineering 21.6 %; cotton fabrics made ups, etc. 13 %; electronics 21.1 %; readymade garments 23.7 %; and drugs 21.5 %. a
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