Exports in negative terrain; inflation eases further
Exports fell 9.9 per cent in November, the second straight month of negative
growth, as demand vaporised in the US and Europe, but falling inflation offered
a compelling excuse for RBI to lower policy rates to help stimulate consumer
spending at home.
Exports dropped to USD 11.5 billion in November this fiscal
from USD 12.7 billion a year ago, while imports grew by 6.1 per cent to USD 21.5
billion. As a result, trade deficit widened by over USD 10
billion.
Although a nearly Rs 35,000 crore worth stimulus package was
unveiled in December to help the industry from the global economic downturn, the
government in the Mid-Year Review tabled in Parliament felt there is a strong
case for RBI to signal even lower interest rates as inflation is
waning.
Inflation, measured by wholesale prices, fell to 6.38 per cent
for the week ended December 20 courtesy cheaper food and fuel
prices.
Making a case for easing monetary stance in view of falling
prices, ICICI Bank CEO and Managing Director K V Kamath had said, "I think just
now let us start by cutting them (repo and reverse repo rates) by 1 (percentage
point) or so, and see what happens." India's industrial production fell 0.4 per
cent, slipping into negative zone for the first time in 15 years, in October as
a result of a massive drop in demand resulting from the global economic
crisis.
With the US and several European countries slipping into
full-blown recession, Indian exporters have run into difficult times, especially
since October when exports contracted by 12.1 per cent, the first time in five
years.
For the April-November period, the country's cumulative exports
grew by 19.4 per cent to USD 119.30 billion -- far short of the USD 200 billion
target set for FY'09.
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