 "Trade deficit and CAD will come down this year: T C A Ranganathan")
The turnaround in exports is because of India's diversification into new markets, especially Latin America, T C A Ranganathan, chairman and managing director of Export-Import Bank of India, tells Nayanima Basu in an interview. Ranganathan, who is retiring on Saturday, expects the current account deficit (CAD) to come down sharply in FY14. Edited excerpts:
While the government is stressing on the fact that exports have turned around due to the measures taken by it, there is no denying the fact that it is the rupee depreciation that did the trick. ..
The rupee, undoubtedly, has helped exports. Growth has mainly come from oil exports, which have grown 16 per cent from April-October. But it is also true that the market diversification exercise has definitely helped in greater penetration. This is especially true for Latin America, where our penetration level is more than one per cent. Till a year ago, we were non-existent there. Besides, programmes such as focus market and focus product schemes have been instrumental.
Do you see the trend continuing?
There is a global factor - recession. For example, within the engineering sector, the auto sector had not been doing good even in Europe, which is under stress. Ditto for the US. Despite this, our exports have grown. So, when world markets are going through a tough time, and if a country's exports are growing, it is a good sign. Could it be better? That depends on many other factors.
Nevertheless, continuing the stimulus package for exporters is also required to sustain this euphoria...
Of course, I do not think the sops will be withdrawn. On the contrary, more needs to be done. Existing companies will continue to invest but we need to encourage more companies to export their goods and compete in the global market. We must have new companies to start exporting.
Now that exports are increasing and imports shrinking, where do you see trade deficit ending this year? Given the trends, CAD this year also should not be a cause of concern like last year...
This year, trade deficit will come down. This is not only because exports are doing well; services, too, are doing well. So, the CAD should come down sharply.
Narrowing trade deficit is good, but shrinking of imports is not a good sign for the economy...
Imports are coming down mainly due to gold. But there is no denying that the economy is also slowing down. Some imports have been shut off due to rupee correction, which means diversion has taken place from an importer to a domestic producer.
All indicators such as the index of industrial production and capital formation are showing that the economy is slowing. But having said that, I must say that the rupee correction has taken care of the situation to some extent.
While the government is stressing on the fact that exports have turned around due to the measures taken by it, there is no denying the fact that it is the rupee depreciation that did the trick. ..
The rupee, undoubtedly, has helped exports. Growth has mainly come from oil exports, which have grown 16 per cent from April-October. But it is also true that the market diversification exercise has definitely helped in greater penetration. This is especially true for Latin America, where our penetration level is more than one per cent. Till a year ago, we were non-existent there. Besides, programmes such as focus market and focus product schemes have been instrumental.
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There is a global factor - recession. For example, within the engineering sector, the auto sector had not been doing good even in Europe, which is under stress. Ditto for the US. Despite this, our exports have grown. So, when world markets are going through a tough time, and if a country's exports are growing, it is a good sign. Could it be better? That depends on many other factors.
Nevertheless, continuing the stimulus package for exporters is also required to sustain this euphoria...
Of course, I do not think the sops will be withdrawn. On the contrary, more needs to be done. Existing companies will continue to invest but we need to encourage more companies to export their goods and compete in the global market. We must have new companies to start exporting.
Now that exports are increasing and imports shrinking, where do you see trade deficit ending this year? Given the trends, CAD this year also should not be a cause of concern like last year...
This year, trade deficit will come down. This is not only because exports are doing well; services, too, are doing well. So, the CAD should come down sharply.
Narrowing trade deficit is good, but shrinking of imports is not a good sign for the economy...
Imports are coming down mainly due to gold. But there is no denying that the economy is also slowing down. Some imports have been shut off due to rupee correction, which means diversion has taken place from an importer to a domestic producer.
All indicators such as the index of industrial production and capital formation are showing that the economy is slowing. But having said that, I must say that the rupee correction has taken care of the situation to some extent.