Among the key factors driving any country’s economic growth, exports figures on the top rungs. According to official data, India has witnessed an exponential 600 times growth in total exports since Independence. India, traditionally a cash crop and spices-rich country, exported $1.27 billion worth goods and services in 1950-51. However, soon after, growth stagnated under the strict policy regimes.
Commodities like jute, tea, cotton and textiles dominated exports from India to the rest of the world. However, the demand for imported goods and services were much higher among people. Thus, while the import bill increased substantially, the exports tally met with a stunted performance. Added, licences were required for starting new companies, for producing new products or expanding production capacity. The high tariffs on a number of products imported deterred possible trading allies. Clearly, India was not a favoured market for foreign investors.
The game-changer turned to be the liberalisation in the 1990s. Under finance minister Manmohan Singh, India opened its economy to the world. In his 1991 budget speech, Dr Singh explicitly stated that trade policy reforms were an important part of economic reforms initiated by the country. What was met with stiff resistance because it also meant stiff competition for indigenous products, eventually paved the way for a thriving economy. Liberation, privatisation and globalisation (LPG) was surely here to stay.
In more recent times, despite the devastating second Covid wave in April-May 2021, exports showed a positive sign. It has remained over the $30 billion-mark since March last year. India achieved its ambitious target of crossing $400 billion exports on March 23, with nine days remaining in the financial year 2021-22.
With this, India achieved a key milestone in its journey towards becoming aatmanirbhar.
Why do exports matter?
Exports are one of the fundamental drivers of growth for any economy. It can influence a country’s GDP, exchange rate, level of inflation as well as interest rates. A robust export data is beneficial as it leads to increase in job opportunities, enhances foreign currency reserves, boosts manufacturing and also increases government’s revenue collection. It is also a good means by which a country can bring itself out of the recession phase. Exporting to countries with a favourable economic climate helps in increasing the GDP levels as well as in reducing unemployment.