Sep 14, 2001|
External Trade: Where are we heading?
It is a well known fact that the economy is slowing down. Revenue collections have also been affected in light of falling corporate profitability. Given the gloomy environment, how is India's external sector performing?
The slowdown in the economy has not augured well for external sector. Goods movement in all the major ports have considerably slowed down. In May 2001, traffic at all major ports fell by as much as 15.7%, the sharpest fall since March 1999. For the first four months of the current financial year i.e. April-July 2001, total traffic has fallen by 3.1% as compared to a 6.1% growth in the corresponding period of the previous year. However, for July 2001, freight traffic has increased by 1.4% to 241 MT.
If one were to look at the commodity wise traffic data, petroleum, oil and lubricants (POL) that accounts for almost 37% of total traffic fell by 9.3% for the aforesaid period. On the other hand, cement, foodgrains and iron ore traffic have gone up sharply by 27.5%, 143.5% and 10.1% respectively (cement shipment for the month of August 2001 had increased by 12%). Though steel production had increased only marginally in 1QFY02, finished steel production has reported a 1.6% growth after a continous fall in output for four months.
One of the key reasons for a lacklustre external trade is the slowdown in the industrial production on account of a subdued demand scenario. The Index of Industrial Production (IIP) grew by just 2.1% in 1QFY02 as compared to around 5% in the the corresponding quarter of the previous year. As a result, the gross domestic output estimates for the current year have also been scaled down by various institutions.
CMIE expects exports and imports to grow by 7% and 5% respectively in the current year (while exports grew by 20% in FY01, imports registered a marginal fall of 0.1%). However, there is a silver lining. Agricultural output is expected to grow by 7% on the back of a good monsoon. This should bring in some respite to the industry in the second half of the year. However, the recent terrorist attack on the US is expected to have a significant impact on world trade in light of nervousness in the global markets. If it turns out to be so, India might have to contend with lower exports for the rest of the year.
More Views on News
Jul 25, 2017
Equitymaster HQ has been infiltrated. Valuable stock ideas have been leaked. Who's responsible?
May 27, 2017
What happens when minority shareholders are short-changed in the normal course of business?
Feb 15, 2017
PersonalFN believes SEBI has taken a step back-apparently in the admission of it going overboard with the regulations.
Aug 24, 2016
And here's your chance to claim a free copy of this book...
Aug 12, 2016
And Why India's demographic dividend could turn out to be a doubtful debt...
More Views on News
Aug 7, 2017
The data tells us quite a different story from the one the government is trying to project.
Aug 10, 2017
Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.
Aug 8, 2017
Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...
Aug 12, 2017
The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.
Aug 7, 2017
Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...
Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement. LEGAL DISCLAIMER:
Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here
. The performance data quoted represents past performance and does not guarantee future results.SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.
Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: email@example.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407