India’s exports decline for ninth month on weak overseas demand

India’s exports declined for a ninth consecutive month in June as the worst global recession since the Great Depression slashed demand for the nation’s products.

Merchandise shipments dropped 27.7 per cent from a year earlier to $12.8 billion, after sliding 29.2 per cent in May, the government said in New Delhi today. Exports plunged 33.26 per cent in March, the biggest fall on record, according to Bloomberg data going back to April 1995.

Trade Minister Anand Sharma last week said the government may announce more relief measures in the second week of August to help exporters fight shrinking profits and narrow job losses. Governor Duvvuri Subbarao said July 28 weaker exports were hurting the economy, which is predicted by the central bank to expand at the slowest pace since 2003 in the 12 months to March.

“One important driver of slower industrial output growth is the slump in exports,” said Shashanka Bhide, an economist at the New Delhi based National Council of Applied Economic Research. The government should help companies selling abroad to keep their “costs under check to maintain price margins,” Bhide said.

Finance Minister Pranab Mukherjee in his July budget announced some relief measures for exporters including extending the deadline for cheap loans and giving them financial assistance to develop new markets.

The Reserve Bank of India in its July 28 meeting held key policy rates unchanged near record lows to support growth. The central bank left the reverse repurchase rate at 3.25 per cent and maintained the repurchase rate at 4.75 per cent after cutting them by a quarter point each on April 21.

‘Not Encouraging’

Declining exports have resulted in companies cutting 500,000 jobs in 10 industries, Trade Minister Sharma said July 8.

“The outlook for the trade sector in 2009 in India is not very encouraging,” India’s finance minitry aid on july 2, cuting an International Monetary Fund projection that world trade volumes will slide 11 per cent this year.

India probably won’t achieve its $200bn export target for the fiscal year to March 31 due to the “continuing global financial crisis and economic slowdown,” Junior Trade Minister Jyotiraditya Scindia said July 22. The decline in exports is likely to continue until September, according to the government.

India’s imports fell 29.3 per cent in June to $18.97bn, taking the trade deficit to $6.16bn in the month, today’s report showed.