“Anant Vijay & Mukesh Jagota” - India Exports Jump Nearly 50%
April 5, 2011 Anant Vijay Kala & Mukesh Jagota
April 1, 2011
http://online.wsj.com/article/SB10001424052748703806304576235910758480104.html
NEW DELHI –India's merchandise exports surged almost 50% in February from a year earlier thanks to improving global demand while local manufacturing activity remained buoyant because of steady order inflows, helping douse worries that economic growth might slow.
Exports during the month stood at $23.5 billion, according to provisional data issued Friday by the Ministry of Commerce.
The ministry didn't give any reasons for the growth in exports.
For the April-February period, or the first 11 months of the just-ended fiscal year to March 31, exports were $208.2 billion, setting them on course to comfortably meet the government's upwardly revised projection of $225 billion for the last fiscal year.
The government had initially set an export aim of $200 billion for the last fiscal year, but an improvement in overseas demand for Indian shipments of gems and jewellery and petroleum products, among others, prompted it to raise the target to about $225 billion.
Aditi Nayar, an economist at credit rating agency ICRA, said merchandise exports have averaged more than $22 billion over the past three months, which is an encouraging sign. She expects exports to reach $232 billion to $235 billion in the last fiscal year.
"While relative exchange rate movements and global economic conditions would influence the trajectory of exports in the coming fiscal year, the recent trend regarding diversification of export markets is expected to support the magnitude of merchandise exports in 2011-12," she said.
The data showed February imports rose 21.2% to $31.7 billion, due largely to a 31% increase in non-oil imports to $23.4 billion. Non-oil imports--mainly capital goods and raw materials--were up 20.4% to $217.1 billion in the April-February period, pointing to the robust manufacturing activity in Asia's third-largest economy.
Oil imports, on the other hand, fell 0.3% to $8.21 billion in February but were 12.4% higher at $88.1 billion in the April-February period.
The sharp increase in exports helped shrink the February trade deficit to $8.1 billion from $10.4 billion a year earlier.
Separate data showed manufacturing activity in the world's second-fastest-growing major economy expanded at a robust pace amid flaring inflationary pressures.
The seasonally adjusted HSBC Purchasing Managers' Index, prepared by Markit, was at 57.9 in March, unchanged from February.
A figure above 50 indicates expansion.
Leif Eskesen, chief economist for India and Asean at HSBC, said the steep increase in input costs is increasingly being passed on to output prices, which call for a further tightening of monetary policy.
The Reserve Bank of India raised its key monetary policy rates by 0.25 percentage point at its last policy review on March 17, the eighth increase since March 2010, as it struggles to control price pressures.
Economists expect the central bank will have to raise the rates by another 50-100 basis points in 2011 as inflation remains at uncomfortably high levels.