With recession stalking the United States and Europe — India's major trading partners — exports are on a slow track.

For the fourth consecutive month in January 2009, the value of exports in dollar terms declined by 15.9%, with the fall steeper than what was recorded in October last (-12.1%). A year ago, the growth rate in exports was impressive at 20.5%.

However, an unusual development in our foreign trade was that imports too posted a negative growth in January, with the import bill down by 18.2%, thanks to a plunge in the value of oil purchases from abroad and a fractional dip in non-oil imports.

Due to this deceleration in both exports and imports, the latest month posted a lower order of trade deficit — $6.075 billion as against $7.849 billion in January 2008.

For the period, April 2008- January 2009, exports were up by 13.2%; this rate compares poorly with the spurt of 21.6% during the same period of 2007-08. In respect of imports, the pace was in double-digits at 25.3%. With the pace of imports nearly twice that of exports during the first ten months, the trade gap during this fiscal has jumped to $99.093 billion from the preceding year's $66.830 billion.

The export target for 2008-09 was pegged at $200 billion. To achieve this goal, exports must zoom to an average of $28 billion in each of the two remaining months. The average monthly value of exports thus far amounts to $14.4 billion, indicating that exports have to double in February and March to hit the target.

In the light of the distinct setback in exports over the past four months, any great improvement in the remaining period of this fiscal is unlikely, given the problems our industry has to contend with at home and the continuation of the economic slowdown abroad;

we will be lucky if exports reach a level of $175 billion.

The noteworthy event is in regard to imports. Here, during January 2009, oil imports were down by as much as 47.5%.

Though in volume terms, no let-up was likely, the fall in the price of crude was hefty — the Indian basket averaged at $43.99 in January 2009 compared with $89.52 a year ago — which had depressed the value of oil imports to $4.463 billion from $8.505 billion in January 2008.

However, on a monthly average basis, the decline in the Indian crude basket had set in only from October 2008 onwards and in January 2009 there was a mild flare up, so that reflecting the higher prices that had prevailed earlier, oil imports in the first ten months of this fiscal were higher by 32.4% at $83.290 billion.

Non-oil imports surged by nearly 22% during this period in relation to the same months of the preceding year. With a far slower rise in exports, the foreign trade ledger was awash with red ink.

When the trend in exports is studied with the movement in imports, the ten-month data for current financial year indicate one disquieting development — the inability of our exports to finance the import bill on an increasing scale.

Rather, the reverse seems to be true, with the import-purchasing power of exports sliding to 59.3% now from 65.6% during the same period of 2007-08.

S Gangadharan/ DNA-Daily News & Analysis Source: 3D Syndication