Export Import Imbalance

It is disheartening and a matter of concern for all Finance Managers that value of export from India has been falling month after month whereas that of import has been consistently going up. This has resulted in trade deficit and causing erosion in Foreign Exchange reserve of the country. Government of India sometimes blames global recession and sometime high interest rate for such pathetic situation in forex business of India. On the contrary China has been successful in increasing export from China to a great extent inspite of global recession.

It is unfortunate that government has not taken any good and appropriate step either to increase export or to reduce import. Government has not tried to analyze why after all export is consistently decreasing and import is increasing. It has become the habit of Key ministers in central government to always blame high interest rate for such adverse picture emerging in the country in regard to trade balance. Similarly GOI has not taken any good step to increase credit growth in state run banks and to reduce bad loans in these banks. Government similarly accuses bank interest rate for poor credit growth in banks but do not like to introspect in working style of various ministries and departments under control of the government.

Until government shows boldness in accepting the real cause behind adverse export figure and positive import figure, they cannot contribute in improvement of the fiscal health. In the same way government has failed to improve health of assets in state run banks. They are not ready to punish the guilty officers and do not want to stop political exploitation of banks for political gain. This is why there is poor growth in credit delivery whereas there is continuous deterioration in quality of assets of these banks whereas private banks are giving double credit growth and downtrend in value of bas assets.

The bitter truth is that interest rate has no significant role in growth of export business and no role in credit growth .Contribution of interest in production of any goods or services is negligible. It is always the administrative delays in clearance of any project, delay in issue of export or import license, frequent and huge fluctuation in rupee value, poor infrastructure , hindrances created by custom department, political interference, frequent change in policy related to export-import business, political exploitation of business houses for political fund, delay in sanction of loan to exporters, incompetent officers sitting at top post in state run banks, bribery and flattery playing bigger role in sanction of loan, fraudulent activity in recruitment and  in promotion of bankers  etc which are primarily responsible for continuous fall in IIP figure, export figure and finally at GDP figure.

Government will have to concentrate on increasing manufacturing sector and agriculture sector instead of blaming interest rate or global recession or wasting all energy in FDI in retail. For this purpose they will have to improve functioning style of bankers, administrative offices, ministries and customs and ensure to bring about reformation in these to make them customer friendly.

Last but not the least, GOI will have to ban import of gold and all other commodities, goods and services which are avoidable, GOI will have to reduce fuel consumption to decrease fuel bill in imports.