Madan Sabnavis, Chief Economist, CARE Ratings, tells ET Now that weakening rupee to a certain extent would help to push up exports at the margins.
There has been 20% growth in exports in May, imports have also been at $43.48 billion.
In terms of exports, he is quite sure that they will want it to be better because Indian exports are dependent on how the global economy performs and since some of the major regions like United States and European region are showing signs of a recovery, it is good news in terms of our exports.
Also, the fact that the rupee has been weakening to a certain extent would also help to push up exports at the margins because there are certain commodities which are fairly sensitive to prices like textiles which includes readymade garments and to a certain extent to handicraft.
One needs to see how the other competing nations currencies also perform. That way, Indian exports are pretty poised for better growth this year.
This could also go along with higher level of imports because of crude oil and metals. There could be a further pressure on the trade deficit and current account along the way.
If you look at the balance of payments data, trade credit has been very important issue in terms of borrowing from outside. That should even out over a period of time but it is definitely a genuine concern in terms of trade finance.
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