India’s exports jumped by 35 per cent in May largely because of the low base last year. This is the seventh consecutive month, when exports have seen a positive growth.
“Don’t get carried away by the numbers. In terms of mood, things are looking brighter than last year. There is some degree of recovery in exports. But should we be opening up the champagne? No, not yet. We are not out of the woods yet,” said the commerce secretary, Mr Rahul Khullar.
India exports were at $16.1 billion in May 2010 as compared to $12 billion in the same month last year when most of the European economies and the US were still deep in the economic recession. However, this year’s May export figures are still lower than $18.7 billion seen in the same month in 2008 before the Lehman Brothers failure pushed the world into the financial crisis.
In May, imports grew by 30.8 per cent pushing the trade deficit to $21.7 billion. Even though the trade deficit is large, this exports are growing faster than imports due to the small base last year. While exports had crashed last year, imports had not gone down that badly as India was still growing at a healthy pace. However, what is worrying government is the depreciation of the euro against the rupee due to the crisis in countries such as Greece and Spain.
The government is afraid that the change in the exchange rate will make exports to this region less profitable.