Port Wings Editorial:
July 08, 2015:
Few months back, OECD has downwardly revised its forecast for global economic growth for 2015 from 4% to 3.1%, which would be less than the 3.3% growth the world witnessed in 2014.
Since, US economy has contracted in the first quarter, China clocked a moderate 7% growth, emerging economies slowed down and If Greece fails to reach an agreement with its creditors, Europe will feel the strain again which may further lower the forecast for 2015.
In the globalised world, even a small action on the economic front even in a remote place of the globe, could send signals upto India.
First, it was the RBI Governor Raghuram Rajan who spoke about the impending signs of Great Depression of 1930s few weeks ago. Though he had completely denied of saying such thing during a media interaction in Chennai on July 2, it has opened Pandora ’s Box and reactions are pouring in from various quarters.
The FIEO has went a step above the Rajan’s forecast and its president Mr Ralhan said that global economy, which hitherto was in challenging phase, is entering into a dangerous stage which will have ominous implications for India and the World.
President FIEO further apprehended that if exports continue to move in negative territory, it will sooner or later put pressure on CAD also and may derail the rebuilding of economy which the new Government is keen to do as Forex reserves will not provide the cushion which the exports provide.
And more came from the DGFT. Its chief during a meeting with the trade in Kolkata on July 3 openly advised the Indian exporters to look for opportunities in new markets as European Zone is feeling the heat from Greece crisis, which is still in the unfolding stage.
The statements from three different people this week, directly linked to the EXIM trade, have opened a new front before the Prime Minister Narendra Modi to tackle the situation on war-footing.
Even though the Government of India is taking measures to help improve exports from the country, there has been a sense of confusion among the trade and the new Foreign Trade Policy has put question mark over the implications of the government’s plan for recovery.
First and foremost, the Government of India should immediately initiate the dialogue with the industry to understand the challenges and revisit its strategy to support the exports sectors as consecutive six months decline in exports indicate that current support level for exports is not enough.
Indications are very clear for the government led by Narendra Modi to act fast. The time for some real action has begun. If the declining phase in exports further extends to another quarter, then it would be very hard for the Trade to manage the lost ground in next fiscal.