EXPORTS: INDIA'S $400 BILLION MILESTONE

The centre of gravity of international trade has shifted away from Europe and the US to Asia. Multilateral trade agreements are losing ground to bilateral agreements and India is presently in the process of entering into FTAS (or free trade agreements) with six countries.

- Shri V.P. Nandakumar

India’s merchandise exports grew by 43 per cent in 202122 to cross the milestone of $400 billion dollars. The record exports in FY 2021-22 represent a 33 per cent surge over the pre-pandemic levels of 2019-20.

If the year 2020 was defined by the pandemic and all the stresses occasioned by it, it may be said that 2021 was the year of economic recovery with pent-up demand and generous fiscal and monetary stimulus by governments and central banks around the world spurring economic activity. However, by the time we entered 2022, the picture had darkened somewhat with inflation emerging as a major threat to global growth. And then, the war in Ukraine (which started on 24 February) added to the gloom. Consequently, stock markets around the world have begun to surrender the extraordinary gains they registered in 2021. Here in India, there are signs that with inflation threatening to get out of hand, the RBI may be forced to follow in the footsteps of the US Federal Reserve and push through a series of hikes in interest rates. Already the first shot has been fired with an unexpected hike of 40 bps in interest rates announced on May 4, 2022. All the same, amid the increasing pessimism about our economic outlook, there are some positive trends as well that bode well for the future.

One such trend is related to India’s collections under the goods and services tax (GST). Recently, it was reported that GST collected in April 2022 (and pertaining to the economic activity in March) broke all records, having touched Rs.1.68 lakh crore. This is the 10th month in a row that the GST revenues have exceed ₹1 lakh crore and the April collection is about 20 per cent higher than Rs.1.40 lakh crore achieved in April 2021.