New Delhi, June 28 (IANS) The Federation of Indian Export Organisations (FIEO) has warned that the continuing decline in exports would result in layoffs besides putting pressure on the current account deficit (CAD).
The statement came a day after Reserve Bank of India Governor Raghuram Rajan’s warning that the global economy is on the brink of a 1930s-type Great Depression.
“The global economy, which hitherto was in challenging phase, is entering into a dangerous stage which will have ominous implications for India and the world,” FIEO president S.C. Ralhan on Saturday said in a statement here.
Ralhan said that based on the current order booking position, he is apprehensive that exports may significantly decline in volume in the months ahead, which will result in layoffs in jobs.
“It would be a big setback for the country, which has kept employment creation its top priority and is aiming to create 10 million jobs every year,” he said.
“If exports continue to move in negative territory, it will sooner or later put pressure on the CAD (current account deficit) also and may derail rebuilding of the economy which the new government is keen to do as forex reserves will not provide the cushion which the exports provide,” Ralhan added.
India’s merchandise exports continued to decline for the second month this fiscal, this time down by over 20 percent at $22.35 billion in May from $27.99 billion in the like month of the previous year, official data showed earlier this month.
Cumulatively, for the first two months of this fiscal, exports at $44.40 billion were down 17.21 percent over that during April-May 2015.
Saying that he was in full agreement with the RBI governor, Ralhan also said that the consecutive six-month decline in exports shows that the current level of state support for exports is not sufficient.
Rajan, who had predicted the 2008 US financial collapse, has been warning that global markets are now at the risk of a crash due to the competitive loose monetary policies being adopted by developed economies.
Pointing to the very low interest rate policies of the US Federal Reserve, the Bank of Japan and the Bank of England in a bid to stimulate their economies, Rajan has been warning that emerging markets are especially vulnerable to big shifts in capital flows triggered by the unprecedented monetary accommodation in rich countries.