Key sector growth drives October exports up by 43%

India is poised to re-emerge as one of the fastest growing economies supported by the low interest rates, diminishing inflation, low current account surplus, and rising exports

November 16, 2021

Sectors such as engineering, gems & jewelry, chemicals, leather, ready-made garments, and electronics aided India to maintain its growth momentum

Aggregate import value for April to October 2021 was at $331.39 billion - 15.84% higher than the same period in 2020

Improved cumulative demand, favorable monetary and credit environment, and quality of the government expenditure is aiding the economic recovery

Capital expenditure in the states has increased from April to August 2021, resulting in tax revenue growth

Rise in exports across top sectors such as engineering, gems & jewellery, chemicals, leather, ready-made garments, and electronics aided India to maintain its growth momentum and post a 43.05% year-on-year increase to reach $35.65 billion while imports surged by 62.5% to reach $55.37 billion, as per estimates released by the Commerce Department. However, the trade deficit more than doubled to $19.73 billion, from $9.15 billion in the same month last year.

The aggregate import value for April to October 2021 was at $331.39 billion – 15.84% higher than the same period in 2020. The trade deficit for the period increased to $97.85 billion compared to $35.47 billion in April-October 2020. In addition, the value of non-petroleum and non-gems and jewelry exports in October 2021 was at $26.09 billion, posting a growth of 27.75% thus indicating that export growth was across sectors.

In line with this, the RBI also released its State of Economy report which stated that the cumulative demand in the economy is improving, and the overall monetary and credit environment is favorable for economic recovery as the quality of the government expenditure has improved with the revenue expenditure to capital outlay ratio (RECO) in the second half of 2021.

Due to low-interest rates, reduced inflation, and a low current account surplus, there is a brighter near-term outlook on cumulative demand. The report also states that the Indian economy is differentiating itself from the global economic situation, as the job market is showing signs of growth leveraging on a rise in business optimism and a faster vaccination pace. In addition, exports have recovered and collections under the goods and services tax (GST) have been strong. The capital expenditure in the states has also increased from April to August 2021, which has resulted in tax revenue growth. It is expected that the release of the GST compensation cess of Rs 44,000 crore will further improve the states’ revenue position. The manufacturing sector has also improved in overall operating conditions, while the services sector is undergoing strong expansion.