India's declining exports are a concern for the economy

- The Conundrum of Economics - Dhawal Mehta

- Now that inflation is under control, the fear of interest rate hike is over

Some developments in India's economy are encouraging and some are worrying. E.g. India's economic growth rate of 6.5 percent for the current financial year is encouraging as no rich country in the world (including Japan) can achieve even 6 percent economic growth rate in the next current year. A country with huge prosperity like America will not be able to achieve an economic growth rate of even four percent in 2023, while Japan will consider itself a lucky country even if it achieves a growth rate of three percent. Another good thing for the Indian economy is that India's wholesale market inflation in April 2023 is the lowest in the last three years. The main benefit of this will be especially to the manufacturing sector of India. Not only the wholesale price figure but also the retail market price stood at 4.7 per cent in April 2023 which is below the Reserve Bank's maximum limit of 6 per cent. Hence India's fear of run-away inflation has been reduced. Similarly, the rate of population growth in India has come down. After India's population reaches its peak in 2050, the population growth trend is seen to decrease gradually. One benefit of India's gradual taming of inflation is that the Reserve Bank of India is unlikely to raise current interest rates in the near future. One good thing happening in the industry is that the major chip companies of the world have shown willingness to invest huge capital to manufacture chips in India. There is a growing possibility that many foreign companies in India will set up their factories in states like Bangalore in Karnataka and Ahmedabad in Gujarat. To attract this industry in India, the central and state governments of India have shown readiness to provide financial incentives worth ten billion dollars. So that the huge chip manufacturing companies of the world will make their direct investment in India and as Taiwan has become a rich country due to chip production, India will also advance in chip production in the future because machines equipped with artificial intelligence will need chips in the number of crores in different types of electronics. Optimism has arisen in India that the India of the future will create a large number of upstream and downstream employment by entering the electronics industry from electricity. At present, the industry of semi-conductors in the world is estimated at 600 billion dollars, which is almost certain to become 1 trillion dollars (one trillion dollars means 1000 billion dollars) in the near future. Because in the next few years, artificial intelligence devices are going to be everywhere in the world.

Amidst all this optimism, India's export picture is worrying. India's exports in April 2023 were the lowest in the last three years. In April 2022, India's exports were 39.70 billion dollars (one billion equals 100 crores), which decreased by 13 percent to 34.66 billion dollars in April 2023. Before this, it had decreased by 35.52 percent in May 2020. Of course imports in India are also decreasing. The main reason for which is the fall in prices in the commodities sector. Of course the picture of services exports is positive. In April 2022, the export of services from India was about 24 billion dollars, which has increased to 30.36 billion dollars in April 2023. India depends on OPEC and Russia for petroleum demand. It also increases the uncertainty of the Indian economy. India has to plan its domestic production at the cost of fuel oil producing countries.