Study Material | Test Series
Drishti IAS
call1800-121-6260 / 011-47532596
Drishti The Vision Foundation
(A unit of VDK Eduventures Pvt. Ltd.)
mains Test Series 2018
Q. HSBC on India’s export slump: Discuss the recent HSBC report on India’s export slump in last 21 months.
Oct 21, 2016 Related to : GS Paper- 3

Ans :

Introduction-

India’s exports of goods and services have been shrunk in 20 out of 21 months. The slumps in Indian exports are blamed at dismal performance on sluggish global growth and tight monetary policies by the Reserve Bank of India (RBI). 

Issue-

Though both sluggish global growth and tight monetary policies have contributed in fall in exports of goods and services, but recent HSBC report on sluggish export have demonstrated some other reasons. 

HSBC report-

  • According to report by HSBC, with above two factors, some other domestic factors like poor infrastructure, lethargic policy and other systemic problems etc have immensely contributed to the fall in exports. 
  • India’s creaking infrastructure and broken policy apparatus are the biggest culprit underlying our export drought. 
  • The report says that, global slowdown has contributed 33%, tight monetary policy 17% and above said domestic factors contributed about 50% in India’s export draught.

Analysis-

  • HSBC report point out the various domestic policy and infrastructural issues as main responsible factors behind the fall in exports.
  • India’s poor physical infrastructure like bad roads and ports, inadequate power supply, the lack of stable and cheap fuel like coal and gas are the core reasons behind 50% fall in exports.
  • A sectoral break-up reveals some differences. For example, services exports are dented more severely, by around 25%, by currency appreciation, compared to barely 10% for goods exports.
  • Services, 40% of total exports, are also hurt more by global factors. But the main shackles on exporters are policy incompetence and administrative sloth. 
  • But in every category of exports, from low tech things like farm products to hi-tech engineering, India has steadily lost volume shares. Since long India has neglected irrigation, farm technology, storage and transport etc.
  • Similarly India is now sliding back in the quality and quantity of skills that Indian education system imparts. Though India has initiated various programmes in this regard, but it needs speedy up gradation.

Conclusion-

The recent HSBC report has thrown various other aspects other than the tight monetary policies and global slowdown that are mainly responsible for export draught that India is currently facing.  Hence instead of blaming global slowdown and RBI for tight monetary policy, we need to improve our basic infrastructures and policy aspects.  


Helpline Number : 87501 87501
To Subscribe Newsletter and Get Updates.