India’s commodity exports fell by 18.4 percentage points year-on-year during April-December 2015. In percentage terms, this is the worst fall in export values since 2001, and around 5 percentage points more than the previous high of 13.8 percentage points in April-December 2009.

It might be tempting to put the entire blame for the fall in exports on the sluggish global economic scenario. However, it is also a fact that India’s performance on the external trade front has been found wanting even during better times. Here are some facts which can help understand India’s export predicament during the post-reform period.

India’s pre-liberalization growth strategy was criticized by many on the ground that it stifled exports. It was argued that opening up the economy would open up avenues for increased exports and hence more earnings for the economy. Exports did increase at a faster rate in the post-reform period. Annual percentage growth of exports (in dollar terms) was 37.7% between 1955-56 and 1990-91. It went up to 70.4% between 1991-92 and 2014-15. However, these gains were more than neutralized by a much faster growth in imports. Annual percentage growth of imports (in dollar terms) was 38.4% and 95.1% for the two periods, respectively. As a result, there has been a significant increase in the percentage share of trade deficit to GDP for India. Prior to the reform period, the highest level of five-year moving average of trade deficit as a percentage of GDP was just above 3%. This figure has continued to increase and reached an all-time high of 9% a couple of years ago.

Source:- livemint.com