Even as India has achieved its merchandise export target of $400 billion for 2021-22 ahead of schedule, there is much catching up required to lift the merchandise export to GDP ratio, which has been on a declining trajectory, a report of the parliamentary standing committee on commerce says. It wants the government to enhance the budgetary allocation for 2022-23 to enhance the export promotion programmes.
The 167th report of the committee, tabled in the Parliament on March 22, notes that the merchandise export to GDP ratio of 12.2% in 2018-19 has come down to 11.07% in 2019-20 and 10.94% in 2020-21. "The declining trend in export to GDP ratio since 2018-19 is a concerning factor which would be affecting the economy at large. The Committee, therefore, opines that while the surging trend in exports is noteworthy and commendable, it should be buttressed with proactive measures to sustain the growth momentum. It also recommends that every constituent sector of export should be augmented and strengthened in order to economically endure the growth in exports on a long-term basis," the report says.
Overall (Merchandise and Services combined) exports to GDP ratio stood at 18.7% 2020-21. The ratio was 18.6% in 2019-20 and 19.91% in 2018-19. Services exports' contribution in India's GDP declined from 7.7% in 2018-19 to 7.53% in 2019-20. Subsequently it has increased back to 7.7% in 2020-21.
The committee is of the view that exports have been an intrinsic component of India's economic growth and revival which is spiralling back to normal from the pandemic-induced dormancy. Hence, it could not be seen as a standalone activity.
The committee also notes that against the projected expenditure requirement of ₹7,369 crore for the department of commerce for 2022-23, only ₹6,073 crore has been allocated in the Union Budget (Budget Estimates 2022-23). The shortfall of ₹1,296 crore in the total allocation is due to the lowering of budgetary support for the crucial heads of Marine Products Export Development Authority, Tea Board, Export Credit Guarantee Corporation (ECGC), Trade Infrastructure for Export Scheme (TIES), National Export Insurance Account (NEIA) and Interest Equalisation Scheme, the report said. Stating that the deficit in budgetary allocation under such heads would take its toll on the optimal functioning of vital programmes and schemes meant for export promotion, the committee sought additional funds for the department at the stage of supplementary grants.