Slide to 5-year low due to erosion of commodity prices
India's exports are going to hit the lowest in five years in 2015-16 closing the fiscal between $265-268 billion, according to an industry study.
New Delhi: India’s exports are going to hit the lowest in five years in 2015-16 closing the fiscal between $265-268 billion, according to an industry study. This is significantly lower than $310 billion in the previous fiscal, mainly due to a sharp erosion in commodity prices in the global market and slump in their speculative demand as reflected in futures trading, according to an Assocham study. However, it is not as if the entire export drop is coming around on the back of fall in demand for Indian goods, said Assocham.
“It is only that the global merchandise economy has moved away sharply from a very high cost, ultra bullish commodity situation to a bearish and low cost situation where demand relates mainly to the actual consumption which is rather low key,” it said.
“The pricing power as was being mirrored in the futures trading markets all over the world — be it for crude oil, metals, coal, copper or even edible items turned out to be rather myopic and has totally disappeared. Thus, there is no sentiment build-up around commodities and thus the demand is actually restricted to the real consumption. Nobody is willing to bet for futures and thus there is a meltdown in prices,” it said. It further stated that with the erosion in price tags, the exports in value terms have dropped while in volume, the scenario is not that bad across sectors.
“Like in the world of technology, disruptive changes are also taking place in the real world of goods exports. It will take time before we adjust from the next fiscal when the low base impact would kick in,” said Assocham secretary general D. S. Rawat.
( Source : deccan chronicle )
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