Why has there been a continuous decline in Indian goods exports in the last few months?

This piece originally appeared on Livemint.com

 

The continuing decline in the value of Indian goods exports is partly the result of lower commodity prices. Beyond that, the decline in value terms masks a fundamental problem facing a chunk of Indian goods exports: a drop in demand, which points to a sign of competitive weakness.

Half of goods categories shipped lower quantities

 

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Granular volume data, on a selective basis, was available for the six-month period from April to October 2015, during which Indian exports declined 12.3% in value terms over the 2014 corresponding period. Of the 76 commodities for which volume data was available and which accounted for 44% of Indian exports during this period, nearly half registered a drop in quantity sold in 2015.

Those in decline include both small contributors…

 

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Of the top 25 commodities by volume in our list of 76, as many as 12 registered a drop in quantity sold. Their value share was 22%. These cover both industries dominated by large companies (like petroleum) and those populated by medium and small enterprises (like leather, ayush products and milled produce).

…and big contributors to the Indian export basket

 

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There’s pain being felt on the top also. Of the top 20 commodities by value, which accounted for 61% of all Indian exports, volume data was available for only eight. Five of these showed a drop in volumes. Of the remaining 12, for which volume data was not available, five showed a drop in value terms.

Note: All volume change for April-October 2015 over April-October 2014

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News in numbers, Dec 16, 2015: India’s falling exports, purchasing power in 71 global cities…

$20 billion

What is it? India’s merchandise exports in November.

 

Why is it important? It fell for the 12th consecutive month, a decline of 24.4% on a year-on-year basis. Shows the effect of global meltdown, decrease in global demand and lower commodity prices on Indian exports. Fall in exports of engineering goods (fall of 28.6% in terms of value), petroleum products (54% decline) and gems and jewellery (21.5% fall) had a significant impact on overall export figures. After the financial crisis in 2008-09, India had diversified its exports towards Asian markets (accounts for half of India’s exports in 2015-16 so far) and this continent leads the fall in export growth this financial year.

 

Tell me more: Imports fell by 30.3% in last month compared to November 2014, thereby recording trade deficit of $9.7 billion this November. Since the beginning of 2015-16, exports have contracted 18.4% and imports fell by 17%.

 

73

 

What is it? Number of minutes a Delhiite needs to work to buy a kilo of rice, according to UBS’ Prices and Earnings 2015 report, which compares the purchasing power in 71 cities worldwide.

 

Why is it important? It’s an indicator of how expensive a kilo of rice is, given average wages in a city, and is useful for comparisons across geographies and over time. Delhi tops the list, ahead of Cairo (66 minutes) and Nairobi (62 minutes). A Mumbaikar can buy the same after working two-thirds of that time – or 49 minutes. Rice is the cheapest at Oslo, where one needs to work just four minutes to buy a kilo of rice.

 

Tell me more: In terms of net hourly pay, the two Indian cities in the study – Mumbai and New Delhi – figure among the bottom 10. While New Delhi is last but four, Mumbai is in the sixth position backwards.

 

0.4%

 

What is it? Share of patents in India that came from industry-academia collaboration between 2000 and 2014, according to a report by Thomson Reuters.

 

Why is it important? Shows industry – academia collaboration – which often boosts innovation – has a lot of ground to cover in India. Academia and government filed 20% of patents and the corporate segment filed over 70% between 2010 and 2014.  

 

Tell me more:  According to the study, the main focus areas in innovation in India are in the following categories: human necessities, chemistry and metallurgy, physics, performing operations and transporting and electricity.

 

Rs 4.63

 

What is it? The price at which, SBG Cleantech has bid per kilowatt-hour (kWh) to build a 350-megawatt (MW) solar project in Andhra Pradesh. SBG Cleantech is a joint venture between SoftBank Group Corp., Bharti Enterprises and Foxconn Technology Group.

 

Why is it important? The price bid is the same as the record low solar tariff when US-based Sun Edison bid for a 500 MW tender put out by NTPC in Andhra Pradesh. This could mean such low tariffs are here to stay raising concerns about the viability of such projects. Also, signals the interest by global players in India’s solar industry where the government has a solar energy target of 100 gigawatt by 2022. For SBG Cleantech, this is the first renewable energy project it has won in India after the joint venture was set up this June. SoftBank has pledged to invest $20 billion in solar energy projects in the country.

 

Tell me more: The 350 MW capacity is to come up in a solar park being developed by state-run NTPC and it would buy the power produced from the plant.

 

 

What is it? The amount the two new Indian Premier League (IPL) franchises – Pune and Rajkot – have spent to acquire five players each for the upcoming IPL season in 2016 at the draft conducted in Mumbai on Tuesday.

 

Why is it important? With a salary cap of Rs 66 crore for the players, both the teams are now left with Rs 27 crore each (40.9%) to buy the rest of the squad.

 

Tell me more: While Pune owned by Kolkata-based New Rising picked up MS Dhoni for the stipulated price of Rs 12.5 crore, Suresh Raina was the first preference for Rajkot owned by Intex Mobiles who was bought for the same price.

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News in numbers, Oct 16, 2015: Exports in September, registered births and deaths…

 

24%

What is it? The percent by which exports shrank in September 2015.   

Why is it important? It’s the sharpest fall since September 2009. India’s three major export commodities – petroleum products, engineering goods and gems & jewellery – have all shown sharp decline. Fall in crude prices can be attributed to drop in petroleum products export, but for others, it reflects poor global demand and increased competition from others. Imports too fell by 25%.     

Tell me more: Despite poor export numbers, the trade deficit shrunk by nearly $ 4 billion dollars in September 2015.  

36

What is it? The number of conditions Adani group has to fulfill while implementing the $12 billion Carmichael coal mine and rail project in Australia.

Why is it important? The move comes two months after the previous approval was set aside citing it hadn’t considered impact on two vulnerable animal species – the yakka skink and the ornamental snake. Among the conditions are the protection of 31,000 ha of habitat and return 730 megalitres of water every year for five years.

Tell me more: The impact of these conditions on total project cost will be watched closely and also where will Adani Group get the funding as ten international banks have withdrawn from the project.

Rs 557 crore

What is it? The amount laundered through eight banks using fake import invoices, and a part of Enforcement Directorate (ED) investigation into Bank of Baroda case. ED’s net has widened to include HDFC Bank, ICICI Bank and Kotak Mahindra Bank.

Why is it important? Every import and export transactions are tracked by banks to ensure the genuineness, with returns filed with India’s central bank on periodical basis. This is cross checked with data from customs authorities The scam involving remittance of large amounts of money to overseas bank accounts with fake invoices with no real imports exposed the poor internal control process of these banks.  

Tell me more: Last week, ED said it had unearthed a similar scam involving a single branch of a state-run Bank of Baroda involving Rs 6,173 crore.

 

Rs 150 crore

What is it? The annual savings to railways from buying 50 MW of power through an open bidding process.

Why is it important? This is the first time Indian Railways has tried open bidding method. The price obtained – Rs 3.69 per unit – is much lower than its average cost of Rs 6.7 per unit when purchased from state power utilities. Indian Railways consumes around 4,000 MW of power annually, incurring a cost of Rs 12,000 crore. Savings could benefit the loss making state utility to invest in safety and capacity expansion.  

Tell me more: Another tender for purchase of 585 MW of power will be released soon.    

 

85.5%

What is it? The percentage of births that were registered in 2013. It has improved marginally from 84.5% in 2012. The number of registered deaths is 70.9% as compared to 69.3% in 2012.

Why is it important? Reflects poor data quality that policy makers have to work with. Under domestic laws, it is compulsory to register all deaths and births so as to capture vital statistics like infant deaths, life expectancy, and how many received medical attention at the time of birth or death. The absence of complete registration hampers policy decisions as most often the poor states, where government intervention is required more, is where registration is also poor.

Tell me more: Gross natural addition to population – the difference between total births and total deaths – was 1.63 crore in 2013 as compared to 1.61 crore in 2012.

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News in Numbers – September 16, 2015

News In Numbers: September 16, 2015

 

37.4%

The combined wealth of India’s 198,000 high-net-worth-individual (HNWI) population as a percentage of India’s GDP (in 2014-15). The world’s second most populous nation is home to the 11th largest population of millionaires. India recorded the highest growth rates in the world for HNWI population (26.3%) and wealth (28.2%), due to falling oil prices and “constructive” election results. India and China led the growth of rich individuals and wealth in Asia Pacific, which surpassed North America’s HNWI population by a slim margin and is expected to overtake it in terms of wealth too, by the end of 2015. China’s HNWI population in 2014 stood at 890,000 whose wealth rose 19.3% to $4.5 trillion, which is more than twice of India’s GDP in 2014-15.

 

20.7%

The drop in India’s merchandise exports in August, the steepest decline in five months and contracting for the ninth consecutive month. The two main reasons for this are lower commodity prices and a weak global demand. Exports stood at $21.2 billion while imports declined 9.95% to $33.7 billion in August. India’s trade deficit marginally narrowed to $12.5 billion in August from $12.8 billion in July. The decline in exports was mainly due to a 48% year-on-year fall in shipments of petroleum products to $2.8 billion. Reviving exports is critical as it accounts for nearly a fourth of India’s GDP. S C Ralhan, president of the Federation of Indian Export Organisations has called for the intervention of the Prime Minister and the Commerce and Industry Minister to immediately consult with the export bodies and draw up a roadmap to tackle the situation where reaching last financial year’s export target was looking difficult.

 

Rs 1 lakh crore

The amount Indian Railways is planning to seek from the Finance Ministry for safety upgrade, after a spate of recent railway accidents across India including Karnataka, Uttar Pradesh, Bihar and Madhya Pradesh, which has brought the spotlight once again on the safety aspects of the railways. Chairman of the Railway Board, A K Mital, has said the Indian railways is preparing a “comprehensive safety plan” that includes elimination of all level crossings and strengthening of tracks and bridges. Japanese railways and companies have agreed to help the Indian government in achieving its ‘zero accident mission’. In 2014, 27,581 people died in railway related accidents, of which 9.3% were railway crossing accidents.

 

7

The number of days within which private airlines would have to present their plans to reduce “excessive” fares on certain routes to the Indian government. Junior aviation minister Mahesh Sharma said the government is open to imposing price caps if the responses of the private carriers are inadequate. He also said that the last minute fares are on the higher side and that these are giving the airlines “a bad name”. However, he added that the government prefers to settle this issue without introducing any caps or other rules. The Indian aviation is struggling with $11.3 billion in debt and just two airlines- Indigo and GoAir – made a profit in 2014-15. GoEuro, a European travel website, ranked India as the most inexpensive country in terms of air travel where it costs about $10.36 per 100 km. Recently, chairman of Competition Commission of India, Ashok Chawla, said that there is no need to put a cap on airfares and that market forces would be able to fix the right fares in an unregulated environment.

 

Rs 20,000 crore

The estimated revenue that the festival of ‘Ganeshotsav’ generates across India, according to a report by industry body Assocham. ‘Ganeshotsav’ or ‘Ganesh Chathurti’ is an important Hindu festival celebrated to honour the elephant-headed God, Ganesha. Terming the festival as ‘recession-proof’, Assocham said expenditure on the festival is growing at an annual rate of 30% and the number of ‘mandals’ (elaborate, artificial structures erected with idols of Ganesha) is increasing at 5-10% per year. The report says the setting up of these ‘mandals’ attract “generous contribution by people from all walks of life” and generate employment for thousands of people. A proxy of how the big the festival: organisers of ‘mandals’ across Mumbai had taken a combined insurance cover worth Rs 450 crore last year.

 

 

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