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India’s export growth, which had turned positive in November 2009 after more than a year of setback, continued to exhibit buoyancy for the third month in a row, registering a spurt of 11.5% in January.
Imports, too, were sharply up during the month.

In overall terms, the value of imports was higher by 35.5%; this was on the back of a strong pick-up in the pace of both oil and non-oil imports to the tune of 56% and 28.8%, respectively.
The accelerated tempo of non-oil imports — there was a jump of 22.4% in December, 2009, too — suggests that the domestic economy is on the way to recovery, triggering demand for capital goods and raw materials from abroad.

The surging imports for the latest two months should be viewed against the backdrop of eleven months of continuous decline.
As a corollary, trade deficit for January 2010 stood much higher than what it was a year ago — $10.36 billion asagainst $5.3 billion.

The cumulative picture is, however, far from satisfactory.
During the first ten months of the current fiscal, exports are down by nearly 18% and imports lower by about 20%. Consequently, the trade deficit has shrunk to $86.604 billion from the preceding year’s $111.59 billion. During this period, oil imports fell 25.3% and non-oil imports by 17.1%.

With two months left, it is unlikely that our exports will approximate to the $185.3 billion that was achieved in 2008-09.

Usually, overseas shipments jump in the final quarter of any year.
Even after factoring this, value of exports may be around the 2006-07 level of $160 billion.

But the prospects for larger imports are bright due to the ongoing economic recovery and the steady-to-firm trend in crude prices, so that the lower order of trade deficit notched up till January 2010 is unlikely to persist for the year as a whole.

With ample foreign exchange reserves, the higher import bill is not a problem to contend with. But for exports to cross the magic barrier of $200 billion, we have to wait till March 2011 — this target is set for 2010-11 — assuming that the incentives and efforts to tap new markets and new products for export basket diversificationmeet with success; and most important, economies of our major trading partners stage a fast and robust recovery.