India is going to play against Sri Lanka in the third ODI match tomorrow. So, when I was looking about news items about Indian cricket in Google News, I expected that it will be heavily dominated by the news items regarding the match. I was surprised to see that I could find a lot of news items about falling export income of India in December 2008. Needless to say, it has affected the trade balance of the country negatively.
Here, I am giving you some key facts about the decrease in export and trade deficit:
$200 billion target for the fiscal year
$131.9 billion export achieved in 1 April to 31 December (9 months)
1.1% less export in December 2008 compared to December 2007
trade deficit stands on $7.5 billion at December 2008
$225.8 billion of Import on in 1 April to 31 December 2008 (9 months)
$ 20.25 billion Import in December 2008
150 million people dependent on export sector
Chinese Export Decreased too
You do not need to be a rocket scientist or professor of Economics to understand the reason behind falling export revenue of India. It has happened mainly because of the ongoing economic crisis that has affected both the rich and poor countries in the world. Perhaps, Indian decision makers can get some consolation from the fact that China’s major export slowed in 2008. For the last few years, the economies of that these two countries experienced tremendous growth and very few people could think that they would see negative growth in exports so early.
What to do:
After reading some of the news items, I felt that economic recession will not go away in the distant future and this will be a tough time for Indian economy. I have some suggestions in this regard:
Diversify
I feel that India needs to diversify its export commodities. It may sound like a cliché to you but there is perhaps no other option. This recent economic crisis was unexpected and it came all of a sudden. In fact, India had nothing to do about the problem or in other words, you cannot blame India for the recession. To be honest with you, I can see that at this moment, Indian media is too much excited with the outsourcing industry and most educated people feel that outsourcing is the place to be. For example, call center jobs are considered to be very attractive among educated people because they bring good salary. I do not want to undermine call center jobs but I feel that exhibited people in any country should be more interested about the jobs that match their educational background and skills rather than being assistants to American people online.
Helping small and medium enterprises
In the last three years, I have written extensively on Indian economic sector in SouthAsiaBiz and IndianRaj blogs. I noticed that big companies like Tata and Reliance get a lot of media coverage and there is nothing wrong about it because they are really big. However, I felt that a small and medium scale companies are neglected in India. This is the right time for Indian government to give more attention to the small and medium scale companies.
More research for inventions
India has many universities and colleges and every year, thousands of students come out of them and join the job market. They’re doing well and are working in all the corners of earth. But I strongly feel quality research in Indian universities for inventions. Of course, you may argue with me that India is not a rich country like USA or UK and Indian universities cannot afford to allocate research funds in that level. I have to admit that I agree with this kind of logic but at the same time, there is no other option but to invest in research for new inventions because only that way, more jobs will be created and India can export more products.
Searching for new markets in Asia
If you look at the Export trend of India then you will note is that the country does a lot of business with North America and Europe. I wish that India and decision makers could take the Asian market more seriously. They should explore South Asia, East Asia and China more in terms of foreign trade.
Oil price decrease
The only real of hope for India is perhaps the fact that global oil price has decreased a lot in the last few weeks and this will help Indian economy. Now, the time has come to make the most out of the oil price because you cannot expect that the oil price will remain so low for many years. This is the time to invest more on research initiatives in universities. This is the time perhaps to invest some money on building infrastructures like electricity and communication.
Finally, I like to say that Indian decision makers have to be more focused on their vision for the future. They should try to build a consensus among political parties about economic development. General election is expected to take place after 3 months. The media should be active now in bringing the economic agenda in the forefront of the election campaign and then, the political leaders will be forced to come to a consensus about the future course of Indian economy.
(This entry was originally published on February 2009 and then it got deleted because of technical problem. I am posting it now.)
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