Friday, 11 Jul, 2025
By: Sutanu Guru
The World Trade Organization has just released its forecast for growth in global trade and GDP for 2023. And the news is not good for Indian Finance Minister Nirmala Sitharaman.
Take one anecdotal evidence. Apple I Phone exports are scheduled to double to more than $ 2.5 billion in 2023. In fact, mobile phone exports from India jumped 75% to $ 5.5 billion in the financial year 2021-22. But the bad news has already started trickling in. Trade data for September 2022 was released a few days ago by the Ministry of Commerce. Exports have actually declined by 3.54% to $ 32.62 billion. For the half year ended September, 2022, non petroleum and non gems & jewellery exports grew at a very modest 5.6% compared to the same period in the previous year. Two mainstays of Indian exports-engineering goods and textiles-have actually declined. The reason is simple: the major export destinations for India-barring West Asia-are already in recession or about to enter a recessionary phase. The government of India can provide as many billions of dollars in incentives and subsidies to promote exports under the PLI scheme. But if consumers in export markets stop or postpone buying, as they are now doing, the PLI scheme cannot do anything to boost exports. To quote the WTO release: “ Import demand is expected to soften as growth slows in major economies for various reasons. In Europe, high energy prices stemming fro the Russia-Ukraine war will squeeze household spending and raise manufacturing costs. In the United States, monetary policy tightening will hit interest sensitive spending areas such as housing, motor vehicles and fixed investment…finally growing import bills for food, fuels and fertilisers could lead to food security and debt distress in developing countries. (https://www.wto.org/english/news_e/pres22_e/pr909_e.htm)
In 2021-22, exports from India jumped by an unprecedented 44% from $ 291 billion to $ 422 billion. There was much jubilation and optimism about exports marching towards the $ 1 trillion mark. But a reality check has now hit both Commerce Minister Piyush Goyal and Nirmala Sitharaman. Passenger traffic in airlines is no reliable indicator of trade growth. Yet, despite online meetings and virtual sessions, commercial aviation traffic does provide clear hints about GDP and trade growth. The chart released by WTO shows traffic is yet to touch pre Covid levels. In October 2019, Ms Sitharaman announced historic cuts in corporate tax rates to boost investment. Then Covid struck. This year, more PLI concessions have been offered. But the global economy is tanking.
