Budget speech omitted tepid export figures
In his well-crafted populist Budget speech, Finance Minister Piyush Goyal devoted a lot of time highlighting the policies, programmes and achievements of the government over the past few years. Notably, he made no mention about the lacklustre export performance in the past five years. There was no mention about the challenges of coping with the slowing global economy. In his ten-point vision for the next decade, there was no mention of boosting India’s share in global trade.
It is not that the speech had no words about exports. Goyal did talk about making India self-sufficient in food, exporting to the world to meet their food needs and producing food in the most organic way. He did say that the flagship programme of Sagarmala along the coastal areas of the country will develop ports for faster handling of import and export cargo. But, these were just passing remarks.
Goyal said that to promote the “Make in India” initiative, rationalisation of customs duties and procedures have been undertaken and that the government has abolished duties on 36 capital goods. He also said the Indian Customs is introducing full and comprehensive digitalisation of export and import transactions and leveraging RFID technology to improve export logistics. These types of improved facilitation have been happening no matter which government is in power, with technological advancements providing more and better options.
On one point, Goyal had every reason to take credit. He said that a revised system of importing duty-free capital goods and inputs for manufacture and export has been introduced, along with introduction of single point of approval under the Section 65 of the Customs Act. It is a definite improvement over the earlier provisions but it has not taken off due to stipulations of triple-duty bond and absence of provisions to sub-contract part of the process of production. Also, it appears the trade has not taken the dispensation too seriously due to skepticism about in-bond manufacturing.
When the government introduced the Foreign Trade Policy 2015-20, the stated aim was to increase India’s exports of merchandise and services from $469.5 billion in 2013-14 to about $900 billion by 2019-20 and to raise India’s share in world exports from 2 per cent to 3.5 per cent. The latest April-December figures for this year estimate the exports of goods and services at $396.73 billion. We are nowhere near the target and our share in global trade has probably gone down in the last few years. Fall in commodity prices alone does not explain this disappointment on the export front. Erosion of competitiveness seems the issue, which Goyal never brought up in his speech.
It can be argued that a speech unveiling interim Budget need not cover each and every aspect of the economy and too much should not be made of the omission to mention about exports or competitiveness. However, when a Budget speech devotes a lot of attention to achievements, initiatives, vision etc. failure to deal with the external sector does stand out. I doubt if only domestic consumption and public investment can lead to sustainable economic growth and enough jobs. We need to get competitive and take advantage of opportunities in the global markets. We also need more private investment, especially in green-field manufacturing projects. The Budget speech was woefully short on these issues.
It is not that the speech had no words about exports. Goyal did talk about making India self-sufficient in food. He did say that Sagarmala will develop ports for faster handling of import and export cargo. But, these were just passing remarks