Global recession has resulted in the country recording an almost 16 per cent drop in exports in January, steepest since 1988. It fell to $12.38 billion compared to $14.71 billion same month last year due to a fall in demand for Indian goods overseas.

Total growth in exports in l0-months period from April till January topped $144.26 billion from $127.45 billion in the corresponding period last year, up 13.2 per cent, official data released today indicated. The export target has already taken a knock and has been scaled down to $175 billion for this fiscal from $200 billion earlier.

Amid such gloomy performance by exports, the only silver lining is shrinking of trade deficit by almost 20 per cent to $6.07 billion from $7.56 billion in January 2008 though it almost

doubled during the first 10 months of the current financial year to $444.61 billion as against $269.35 billion in the same period last year.

According to analysts, fall in commodity prices internationally is mainly responsible behind a thinning trade deficit, which is the difference between exports and imports. However, the impact of high level of oil price can still be seen in the cumulative figures.

“While exports are likely to remain weak in the next two quarters as external demand remains subdued, we expect imports to fall faster due to falling commodity prices and the slump in investment demand,” Sonal Varma, Indian economist, Nomura Holdings said.

Imports fell faster than the rate of exports. It declined by 18.2 per cent in January from 8.8 per cent in December and reached $18.45 billion from $22.56 billion in January last year.

Fall in imports can mainly be attributed to a sharp decline in international crude prices.

In January, oil imports were valued at $4.46 billion, 47.5 per cent lower than oil imports valued at $8.50 billion in the corresponding period last year.

While investments continue to decelerate pulling down capital goods’ demand, growth in

non-oil imports fell by 0.5 per cent reaching $13.99 billion from $14.06 billion last year.

Further fall in exports, slowing down of fresh investments and moderation in consumption are all expected to pull down the growth rate of gross domestic product (GDP) to 5.5 per cent in FY10, said Rohini Malkani, economist at Citi India.

To boost the country’s exports, which constitute 21 per cent of GDP, in backdrop of global financial crisis, Nath announced another set of sops to exporters.

Earlier R.S. Gujral, director general of foreign trade, had said exports will continue to decline in February and March also. “These figures are indicative of further slow down in next few months unless bold decisions are taken by the Government to make exports competitive,” Federation of Indian Export Organisations president A Sakthivel said.

Fieo had estimated job losses of around 10 million in export-oriented firms by the end of this fiscal.

The maximum amount of job losses is being witnessed in labour-intensive sectors of textile, gems and jewellery, handicrafts and leather.

The government had earlier offered some fiscal benefits to exporters through two stimulus packages.

Last month it had also announced excise duty rate cut from 10 per cent to 8 per cent on most items while service tax was slashed to 10 per cent from 12 per cent.

Growth in exports, which contracted for the fourth month in a row, declined by 1.1 per cent in December, 10 per cent in November and 12. 1 per cent in October.

The economy grew at a rate of 5.3 per cent in quarter ending December. Growth rate for the

entire fiscal 2008-09 is likely to be around 7.1 per cent from 9 per cent in previous years.