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Exports rally, FDI inflow plummets

The buoyant external sector resulted not only in an accretion of $12 billion to the forex reserves in the first eight months of 2002-03 but also helped the government pre-pay $600.74 million high-cost external debt during April-September.

Given the slower-than-expected recovery in the global economy and trade, the 13.5 per cent exports growth in the first half of the current year was an encouraging sign, it stated. The country's trade deficit at $4.3 billion in the first half of 2002-03 was lower than $4.9 billion in the first half of the previous fiscal.

The current account surplus of $325 million in the first quarter of the fiscal was helped by a healthy growth in remittances and export of services. However, inflows of foreign direct investment (FDI) in the April-August period were 7.6 per cent lower than in the first five months last fiscal.

"Weak investor sentiment and sluggish performance of the Indian stock markets resulted in a net outflow of $248 million through the foreign institutional investor route in this period," it said. As compared to this, there was a net inflow of $873 million in the corresponding period in 2001.

The export rally in the first half was led by manufactured goods, minerals and agricultural products and the markets accounting for the growth were in Organisation of European Cooperation and Development countries, Organisation of Petroleum Exporting Countries and East Asian countries.

While the US continues to be India's largest trading partner accounting for 14 per cent of the country's trade, China is emerging as a major player, already at the sixth position, ahead of Japan and Hong Kong.

The imports growth continued to be modest in the current year, the review stated, ignoring the over 30 per cent increase in the level of imports experienced in September and October. "While overall imports increased 8.5 per cent in April-September 2002, a large part of the increase came from a 13.4 per cent rise in the value of petroleum imports fuelled by high international crude prices," it said.

Non-petroleum imports in the first half of the fiscal rose only 6.4 per cent, mainly due to a drop in demand for gold and silver on account of a sharp jump in their global prices. Barring gold and silver, non-POL imports are estimated to have risen by 12.3 per cent in April-July 2002 as against a marginal rise of 0.2 per cent in the corresponding period of 2001.

Capital goods imports rose significantly, as did imports of products for re-export, electronic items, medicinal and pharmaceutical products, artificial resins and plastic materials. Imports of 300 "sensitive" items rose 10.6 per cent, mainly due to a significant increase in the import of edible oils.

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