India’s exports declined for a third straight month in December as the global recession reduced overseas orders, curbing growth in Asia’s third-largest economy.
Merchandise shipments dropped 1.1 percent to US$12.7 billion from a year earlier, the government said in New Delhi yesterday. Imports in December rose 8.8 percent to US$20.3 billion, widening the trade deficit to US$7.6 billion.
Falling exports may cause 10 million job losses by next month, estimates from the Federation of Indian Export Organizations trade group showed, which would be a blow to Indian Prime Minister Manmohan Singh’s re-election bid in polls in April and May. Exporters employ about 150 million people in India, the biggest provider of jobs after agriculture.
“The exports scenario won’t improve unless the global economy recovers,” said D. H. Pai Panandiker, president of RPG Foundation, an economic policy group in New Delhi. “Job losses in an election year are bad news for any incumbent government.”
Export growth may slow to 17 percent in the year ending March 31, compared with 25 percent a year ago, Trade Minister Kamal Nath told Bloomberg TV on Thursday.
Exports gained 17.1 percent to US$131.9 billion in the nine months to Dec. 31, the government statement showed.
Oil imports fell 31 percent to US$4.7 billion in December, while non-oil imports rose 32 percent to US$15.5 billion, it said.
Nath had said earlier that the government would soon unveil steps to end bureaucratic delays faced by exporters to spur overseas sales. He said India would miss its export target of US$200 billion in the year to March 31.
“There will be job losses due to the global recession, but I think domestic demand is going to help us,” Nath said.
Measures to spur local consumption and investment began on Oct. 6 when the Reserve Bank cut the amount of money lenders need to set aside with the central bank.
In October, central bank Governor Duvvuri Subbarao presided over the first interest-rate reduction in four years and the benchmark repurchase rate is now at a record low of 5.5 percent, down from 9 percent in July.
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