The Hindu Business Line : Capital goods drive import growth — April-Aug numbers reflect brisk economic activity

THE robust merchandise import growth of 39.40 per cent in the first five months of the current fiscal owed itself largely to substantial growth registered by non-oil imports, particularly capital goods as also imports of export-related items, reflecting the brisk domestic economic activity.

This import growth has had a ricocheting impact on the rising index of industrial output during the first half of the current fiscal.

Disaggregated trade data available for the period April to August 2005, based on provisional data compiled by the Directorate-General of Commercial Intelligence & Statistics (DGCI&S) show that machinery imports which account for a share of 9.25 per cent in total imports logged a 51.31 per cent growth at $4473.51 million, against $3226.75 million in the corresponding months of 2004-05.

Significantly, within the machinery imports, machinery other than electrical posted 80.72 per cent growth at $3265.81 million ($2180.37 million). Transport equipment with a share of 1.71 per cent in total imports also did well by notching up a growth of 75.28 per cent at $929.15 million ($530.39 million).

Import of project goods, though accounting for less than one per cent share, posted a 78.84 per cent growth during the period under review at $304.31 million ($170.15 million). Import of speciality iron and steel as intermediates in structural works also posted a high growth of 109.03 per cent at $1933.07 million ($920.84 million), while import of metaliferrous ores and metal scrap grew by 51.41 per cent at $1351.37 million ($892.52 million).

Import of pearls, precious and semi-precious stones, which go into value-added gem and jewellery exports, registered a growth of 38.64 per cent at $4473.51 million ($3226.75 million).

Trade policy analysts contend that non-oil imports contributing about 73 per cent of the total imports had been growing steadily upwards during the past couple of years.

Such imports in dollars accelerated from a growth rate of 17 per cent in 2002-03 to 31.7 per cent in 2003-04 and further to 33.6 per cent in 2004-05. They showed further uptrend during the first half of the current fiscal too.

Meanwhile, NCAER has drawn attention to the discrepancies in trade data even as "right reporting of merchandise trade is an important input for enabling Governments to take major policy decisions impacting its trade flows".

Stating that both exports and imports have been underreported in India, the council said

India's exports to the world were under-reported by 4.5 per cent per cent on an average during 1991 to 2004, while imports from the world were underreported by only 2 per cent during the same period.

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