India's exports growth in recent months suggests that economic recovery could be faster from now onwards and the increase in overseas demands may add to the buoyancy in the Indian economy.

Shrinkage of global demands due to the global financial crisis has affected all major trading countries. After years of high growth, Indian exports were in a slump, leading to massive income and job losses. There was a decrease in demand due to the slowdown in the big markets like US and EU. India's exports declined for 13 consecutive months from October 2008, as the global financial crisis slashed the demand for the nation's products. Exports registered a 34% growth rate in the first six months of 2008-09. However, the global financial downturn struck in the second half of the fiscal, bringing down the growth rate to below 4%. India's exports recorded a marginal annual growth rate of 3.4% in dollar terms in the year 2008-09 over the previous fiscal. Weaker exports are hurting the economy as they are leading to slower industrial output growth. The demand for Indian goods and services needs to pick up in the US and EU, which account for about 35% of Indian exports. Thus, the exports have been south-bound since the global financial crisis deepened in October 2008. The worst-hit segments in fiscal 2009 were engineering goods, gems and jewelry, chemicals, plastics, marine products, tea, tires, handicrafts, cotton yarn, fabrics, jute products, carpets and leather exports. These segments were earning significantly good revenues until July 2008, but the situation has drastically changed since October 2008. These are in fact the most critical of times for Indian exports. The situation has become all the more worrying, as exports form almost one-fifth of the country's GDP and constitute 17-18% of the country's revenues.

Things moved in line during the first six months of 2008, but the situation changed adversely from October 2008, when the financial upheaval in the US started. The weakening of the markets in the US and EU not only puts strain on export revenues but also impacts the companies that are cutting down on manufacturing and labor force. At present, Indian exporters employ over 150 million people. Out of this, some 10 million job cuts have already taken place. Exporters are now battling the disappearing demand and falling margins. It is the worst ever situation for Indian exporters since independence. According to a survey conducted by the industry body, Federation of Indian Chambers of Commerce and Industry (FICCI), Indian exporters were finding it more difficult to do overseas business in EU after the economic downturn due to various non-tariff barriers. It appears that global recession has also taken its toll on the railways. Freight earnings of the railways from commodities like steel, cement and iron ore especially meant for export got a severe blow due to the global downturn. The railways lost nearly $1 bn due to freight rate discount, which was up to 50% on iron ore meant for exports. Container traffic on railway network also recorded up to 40% fall in the last few months. A shrinking global market and continuous slide in Indian export revenues, beginning October 2008, made the government reconsider its estimates of exports and pare it down to $175 bn from $200 bn for fiscal 2009.

The Analyst Magazine, Indian Economy, Global Financial crisis, Global Financial Downturn, Federation of Indian Chambers of Commerce and Industry, FICCI, Gross Domestic Product, GDP, International Monetary Fund, IMF, Economic Downturn, Economic Slowdown, Reserve Bank of India, RBI, Benchmark Prime Lending Rate, BPLR, Export Credit and Guarantee Corporation, ECGC, Micro and Small Enterprises, MSEs.