The new Medium Term Exim Policy focuses attention on increasing agricultural and other exports, but does not address the basic reasons for export stagnation.
 
Commerce Minister Murasoli Maran is right to be concerned about India's export performance. Over the past year, export growth has faltered to such an extent that even the much reduced target of 3 per cent growth will certainly not be met. In fact, the latest data reveal that aggregate exports in the period April 2001 to February 2002 barely increased at all, registering a pitiful 0.06 per cent rise over the corresponding period of the previous year. Since March is notoriously a bad month for exports, this suggests that exports in dollar terms are likely to have been stagnant over the past fiscal year.
 
Nor is this only a reflection of the poor growth of world markets. It is true that total world merchandise trade slowed down dramatically in 2001, growing at only 2 per cent compared to 12 per cent in 2000. But Indian export growth has been even lower than this - in fact 33 times lower !
 
Meanwhile, our imports have continued to grow – in value terms by 2.3 per cent and by much more in volume terms. Even this relatively moderate increase is largely related to the low world oil prices which prevailed over much of the year. Non-oil imports are estimated to have grown by nearly 9 per cent in value terms, and even more in volume terms, over this period. This obviously means that import penetration continues to affect domestic producers adversely. But it has also meant a significant increase in the trade deficit, to $6.76 billion for the period April 2001 to February 2002.
 
So the Commerce Minister is certainly justified in deciding to make export growth one focus of the new medium term Exim Policy, which was announced on 31 March. He is probably also correct in arguing that export pessimism played a role in the fact that export performance in the past was not more impressive. It is likely to have inhibited the emergence of a more strategic policy with respect to exports, without which no major exporting country has been successful in recent times. Clearly, a successful export thrust in the future will have to be associated with a systematic policy, since it is now clear that relying only on private market-determined responses is inadequate for the purpose.
 
The objectives of the Exim Policy 2002-07 are clearly ambitious. It explicitly aims to facilitate export expansion such that India's share of world exports reaches at least 1 per cent of world trade by the end of the period. In addition to this it proposes to stimulate sustained economic growth by providing access to essential raw materials, intermediates, components, consumables and capital goods requires for augmenting production and providing services.
 
The Policy further plans on enhancing the technological strength and efficiency of Indian agriculture, industry and services, thereby improving their competitive strength while generating new employment opportunities. It proposes simultaneously to encourage the attainment of internationally acceptable quality standards. All this would then provide Indian consumers with good quality goods and services at internationally competitive prices.
 
Obviously, everyone would welcome such a paradise for Indian producers and consumers; it is beyond question "a consummation devoutly to be wished". How to get there, of course, is another matter. It is here that the Exim Policy suggests that the Commerce Minister may have missed the basic point in terms of what determines export growth and improved “competitiveness”.
 
The apparent belief is that even more liberalisation combined with some fiscal concessions will do the trick. However, it is quite clear to most observers – and especially to exporters themselves – that problems of poor and costly infrastructure facilities, and inadequate access to reasonably cheap credit are among the most significant problems currently plaguing Indian producers.