Goods exports decline in April
India’s export is reduced by 60.28 percent in the month of April, due to the lock down imposed by the government which is equivalent to $10.36 billion. However, in March country’s export was declined by 34.57 percent. On the other side, the country’s import is also affected. There was a 58.65 percent decline in imports in April which amounted to $17.12 billion. However, India’s Imports have decreased by 28.72 percent from previous year making it $31.16 billion in March 2020. This is the lowest percent that India has seen since August of 2016. Overall trade deficit in April is $6.76 billion which was $15.33 billion in April 2019. This year’s trade deficit is lowest since May 2016 which was $6.27 billion.
Sector and commodities wise:
There is decline in 30 major import sectors such as gold, silver, coal, fertilizer, machinery, transport equipment and machinery. All these sector have reported negative growth in the month of April. Since the first day of the countrywide lock down, oil imports have seen a drop by 15 percent and non-oil purchases dropped to 33.78 percent. Imports of electronic items have dipped down by 29.09 percent. Lastly gold have plunged by 62.64 percent in March. In April, non-oil imports is reduced by 58.5 percent to $12.46 billion and Gold imports stood at $2.83 million which was $4 billion last year. However, other Oil imports was at $4.66 billion, which is 59.03 percent lesser than last year for the same period.
Commodities wise, export of rice declined by 28.28 percent, cereals export saw decline by 33.42%, tea exports fell by 33.74 percent, organic and inorganic material export reduced by 32.88 percent, ready-made garments fell by 34.91 percent and plastic and linoleum declined by 35.67 percent. Imports of commodities is also affected due to lock down, import of precious stone declined by 53.46 percent, electrical and non-electrical machinery fell by 31.72 percent, electric good import fell by 29.09 percent and coal, coke and briquettes declined by 23.54 percent.
However, gems and jewellery shipments fell by 98.74 percent, leather shipments fell by 93.28 percent, and petroleum products declined by 66.22 percent, chemical shipments fell by 42 percent and engineering goods declined by 64.76 percent. Only pharmaceutical and iron ore reported positive growth during last the 2 months.
Impact on foreign reserves:
One big reason for this surge in foreign exchange reserves is temporary closure of imports to India as this has blocked the outflow of foreign exchange reserves, keeping it intact. The reserves showed a surge of $113 million to $479.455 billion in mid-April. The forex reserves show an all-time high of $487.23 billion in early March, after it lofted by $5.69 billion. During FY20, the nation’s forex reserves ascended by nearly $62 billion. In the week of April 27, 2020, a significant part of the overall reserves which is the foreign currency assets (FCA), hiked by $1.752 billion to $443.316 billion.
Due to the lock down, major industrial units are closed. There is restriction for movement in the goods and various other issues such as job loss, 70-80 percent cancellations in orders and increasing non-performing assets is already been noticed. Therefore, government has announced various measures and packages to cope up this situation. For Agri-infrastructure, the government has allocated Rs 1 lakh crore so that farm gate infrastructure such as cold chain are strengthened and Rs 500 crore for operation greens has implemented, for better price realization for farmers.
Government will amend essential commodities act and allow market force to deregulate price. The government will intervene if any emergency situation arises such as drastic hike in price or any other crisis. These announcements will help government to achieve their target of $100 billion Agri exports.