Influence of Exports on Indian Economy
MBA
Micro Economics
“ Influence of Exports on Indian Economy “
INTRODUCTION:
Exports have played an increasingly important role in India’s economic growth in the last two decades. Still Export instability and its impact on the domestic economies of developing countries like India has been of continuing interest. However, studies dealing with the impact of export instability on economic growth have yielded two fairly different views. The 1st view emphasizes the negative impact of export instability on growth. This is based on the variability in export earnings, uncertainty in this also has an impact on private investment decisions and adversely affects both the level of capital. Due to this close link of the government revenue with export revenue instability in the exports causes variability, which amounts to disruptions in public investment and infrastructure.
The second view emphasizes that export instability does not inhibit the process of growth, in fact it may encourage the growth. Rise in income due to deviations of export revenues from their trend will leave consumption unchanged and savings will rise which is believed to raise the level of investment and rate of economic growth.
EXPORTS IN INDIA:
India has been described as an ‘import substituting country par excellence’. A balance of payments crisis in 1991 led to the initiation of an ongoing process of trade liberalization. These events corrected the in-built systemic bias against exports and they have led to a degree of correction of the price distortions in the Indian economy through the creation of a more open economy. More importantly, increased competition and the presence of firms from foreign markets has injected a greater degree of quality consciousness and customer orientation, which has been largely absent due to the lack of competitive pressures. In the past there were few foreign firms present in the protected domestic Indian market. These changes have reduced the tendency of
Micro Economics
“ Influence of Exports on Indian Economy “
INTRODUCTION:
Exports have played an increasingly important role in India’s economic growth in the last two decades. Still Export instability and its impact on the domestic economies of developing countries like India has been of continuing interest. However, studies dealing with the impact of export instability on economic growth have yielded two fairly different views. The 1st view emphasizes the negative impact of export instability on growth. This is based on the variability in export earnings, uncertainty in this also has an impact on private investment decisions and adversely affects both the level of capital. Due to this close link of the government revenue with export revenue instability in the exports causes variability, which amounts to disruptions in public investment and infrastructure.
The second view emphasizes that export instability does not inhibit the process of growth, in fact it may encourage the growth. Rise in income due to deviations of export revenues from their trend will leave consumption unchanged and savings will rise which is believed to raise the level of investment and rate of economic growth.
EXPORTS IN INDIA:
India has been described as an ‘import substituting country par excellence’. A balance of payments crisis in 1991 led to the initiation of an ongoing process of trade liberalization. These events corrected the in-built systemic bias against exports and they have led to a degree of correction of the price distortions in the Indian economy through the creation of a more open economy. More importantly, increased competition and the presence of firms from foreign markets has injected a greater degree of quality consciousness and customer orientation, which has been largely absent due to the lack of competitive pressures. In the past there were few foreign firms present in the protected domestic Indian market. These changes have reduced the tendency of
References: 1.http://data.worldbank.org/data-catalog/world-development-indicators 2.http://comtrade.un.org/db 3.http://unctadstat.unctad.org 4.http://www.iimb.ernet.in/research/journal-publications/ 5.http://www.india-data.org/ 6.http://articles.economictimes.indiatimes.com/2012-07-04/news/32537290_1_export-ban-unrestricted-exports-abinash-verma 7.Articles from http://dailyojo.com/