Goods trade data hints at recovery, albeit  at soft  pace

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India’s goods exports in September were up 6% from this past year to $27.6 billion. Growth in exports was seen after half a year of contraction. However, goods imports continued to contract and were down 19.6% to $30.3 billion. What’s happening here? Mint explores.

India’s goods exports in September were up 6% from this past year to $27.6 billion. Growth in exports was seen after half a year of contraction. Alternatively, goods imports continued to contract and were down 19.6% to $30.3 billion. What’s happening here? Mint explores.

Why are exports falling since March?

There are two reasons for the 21.5% fall in exports to $125 billion through the first half of the fiscal year. One is naturally the rapid spread of covid-19 across countries, which are India’s major trading partners. This resulted in Indian exports’ demand imploding in these countries. Moreover, the nationwide lockdown to prevent the spread of the pandemic put into the woes of exporting firms. Even where there is demand, production had to be stopped as a result of the lockdown, leading to lower exports. Things have already been gradually bettering since May with lower export contraction.

What’s behind the plunge in imports since Mar?

During the first half of this fiscal year, imports contracted by 40.1% to $148.5 billion. The economical contraction following a covid-19 outbreak resulted in a demand crash for imported products. For instance, oil imports contracted by 51.1% to $31.8 billion. This has been both due to a fall in consumption, as well as a major plunge in oil price. The average price of the Indian basket of crude oil in the first six months of FY21 was $36.7 per barrel, against $64.7 per barrel in the year-ago period. The intake of petroleum products has been 18.7% lower this financial year, as people refrained from going out post-covid.

Source: https://www.livemint.com

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