Terming sluggish global demand as a serious challenge in reviving exports, President Pranab Mukherjee on Tuesday laid pitch on improving competitiveness of the domestic industry through better infrastructure and regulation. Mukherjee hoped that the current year’s economic growth will improve as the monsoons will arrive, but the government should remain cautious on the price front. Speaking at the Export Credit Guarantee Corporation of India’s (ECGC) diamond jubilee function in New Delhi, the President said: “Reviving exports in a scenario of sluggish demand worldwide will remain a serious challenge to us. We must overcome (it) by improving competitiveness of the domestic industries through better infrastructure and regulation.”
Weak global demand has weighed on exports, which declined 2.1 per cent in the first quarter of 2016-17, and imports have declined sharply by 11.5 per cent. A lower trade deficit has helped in narrowing the current account deficit by 0.1 per cent of GDP in April-June of 2016-17, from 1.2 per cent in the same quarter of the last year, he said. “Our external sector remains steady while we are committed to prudent fiscal consolidation. This augurs well for our macro economy, but we must remain cautious on the trend of food price,” Mukherjee said. He noted that India is ahead of the rest of the major economic powers and the normal monsoon this year is expected to provide fillip to this year’s growth, unlike the last two previous years when below-normal rains created an agrarian crisis and caused much rural distress.
“Geo-political instability, economic downturn, war and terrorism have further hampered growth of world trade. In spite of these global headwinds, our economy is performing reasonably well, with GDP growth rising to 7.6 per cent in 2015-16 from 7.2 per cent in the previous year,” he said. Mukherjee acknowledged the role of ECGC as of central importance in international trade and investment flows in the difficult global times. “These institutions are, in a manner of speaking, akin to policy instruments at the disposal of the sovereign to ensure adequate and timely support to national exports by way of extending credit, insurance and guarantee,” the President added.