R.S. Tiwari

Pressure of Domestic Demand and Export Performance in India

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Export Performance

EXPORT PERFORMANCE in India has widely been recognised as an essential requirement since the commencement of the Second Five-Year Plan. It is basically important partly because it finances import repayments and debt disbursements and partly because it (export) is conducive in many ways to Indian economic development process. But the fact that India's relative export shares compared to the other countries of the world have been decreasing over time raises certain crucial questions. One question which traditionally seems to have been generally posed in this regard is why India and other developing region, despite their best possible efforts, could not have been able to increase substantially their relative export shares? Other pertinent question which is equally important is how this melody could be overcome, i.e., what are the major correctives to be adopted through which relative export shares could be considerably improved? A large amount of theoretical analysis has been undertaken and a number of sophisticated econometric models has been worked out over a period of time to answer these questions. Most of the studies in this context concentrate their analysis on demand constraints, supply bottlenecks and association of both over a different period of time. Broadly, the analysis of problem has been undertaken at an aggregative level. In fact, the real problem of export deterioration could be meaningfully examined at the level of individual export product item and import country level. Domestic demand for a product in an economy plays an important role in the determination of export performance. Moreover, it is supply side of the problem of export explanation. In this paper an attempt is made to examine the relationship between domestic demand and export performance of India at a disaggregative product and selective import country level over the period 1960-61 to 1974-75. Section I reveals existing India's major export trends, Section II reviews the relevant literature and sets the problem in its proper perspective, Section III explains some important methcodological issues, Section IV reveals findings of the study and Section V derives certain conclusions relevant for policy recommendations.