Global growth to boost exports

The Economic Survey said on Monday that India’s overall external position remains solid. Despite increase in current account deficit recently, it is still well below 3 per cent of GDP threshold beyond which vulnerability emerges.

Meanwhile, forex reserves have reached a record level of about $ 432 billion ( spot and forward) at December end 2017, well above norms, it said.

The Survey said that acceleration of global growth should in principle provide a solid boost to export demand.

“Certainly, it has done so in the past, particularly in the mid- 2000s when the booming global economy allowed India to increase its exports by more than 26 percent per annum. This time, the export response to world growth has been in line with the long- term average, but below the response in the mid2000s,” said the Survey.

It said that perhaps it is only a matter of time until exports start to grow at a healthy rate.

“Remittances are already perking up, and may revive further due to higher oil prices,” it said.

However, the pre- budget survey said that India’s exports are unusual, as largest firms account for a much smaller share of exports than in other comparable countries.

Top one per cent of Indian firms account only for 38 per cent of exports unlike in other countries where they account for substantially greater share. Such tendencies were also found to be true for the top five or ten per cent of the Indian companies, it said.