The World Bank has stressed the need for India to focus on exports given the economic growth of the economy had been driven by domestic demand of late, with its exports amounting to only a third of its potential.
According to World Bank Chief Economist, South Asia, exports were a challenge for India in the recent past with the current account deficit increasing, indicative of the fact that the growth came from the domestic sector. In the past five years India’s growth was driven extensively by the domestic demand which resulted in the expansion of imports but with as little as only four to five per cent growth in exports. The market scenario has changed slightly with the inclusion of GST which has added more flexibility making it easier for interstate trade.
Experts opine the prime focus of the next government should be on increasing exports which is only at 10 per cent of the country’s GDP. India’s exports should have been at 30 per cent of the GDP. The stimulus of the domestic demand will have to be reduced to achieve this. The emphasis on the need for an export-led growth plan is vital to increase productivity which will, in turn, allow the country to compete in the international markets.
The concern at present is pertaining to the fact that the gap of 20 per cent between India’s current export ratio to GDP of 10 per cent and what it should be, 30 per cent, is huge and this gap has only widened in the past few years. Citing these reasons, the World Bank suggests the next government must focus on the growth of the country through greater inclusion of exports.