29

CHAPTER V

TRADE AND EXTERNAL RESOURCES

5.1 Review of Fourth Plan

5.1.1 During the first four years of the Plan, exports and remittances grew at a continued higher rate while imports grew at a slower rate fluctuating from year to year. These trends in export earnings and import payments for goods helped contain trade deficit and ultimately caused the current account deficit to decline. The trade balance and the current account balance, however, worsened in the terminal year of the Plan, largely because of the growth of imports in 1994/95. Overall balance of payments position over the Plan period is shown in Table 5.1.

Table 5.1 Balance of Payments 1990-95 (at 1989/90 prices)

( in million US$)

Category

Projection

Actual

Achievement (%)

Import Payments

(-) 22,668

(-) 22,735

100.30

a. Goods (c.i.f.)

(-) 19,811

(-) 19,681

99.34

b. Services

(-) 2,857

(-) 3,054

106.90

Export Receipts

13,528

13,138

97.12

a. Goods (f.o.b.)

10,792

10,392

96.29

b. Services

2,736

2,746

100.37

Balance of goods & services

(-) 9,140

(-) 9,597

105.00

Remittances

4,326

4,296

99.31

Current Account Balance

(-) 4,814

(-) 5,301

110.12

Medium & Long Term debt repayments

(-) 1,343

(-) 1,140

84.88

Balance of Payments gap

(-) 6,157

(-) 6,441

104.61

Aid Inflow

8,338

7,564

90.72

5.2 Imports

5.2.1 Import of goods at 1989/90 prices grew at an annual rate of 6.14 per cent which was higher than 5.11 per cent envisaged in the Plan. Total import during the Plan period was, however, $130 million (0.66 per cent) less than $19,811 million projected in the Plan due to low imports during the early years. Imports started picking up after declining during the first two years of the Plan and spurred to a peak of $ 5,051 million in the terminal year. Foodgrain imports rose sharply to $622 million in 1994/95, as opposed to the expectation of a fall to $100 million. Non-food imports and imports of intermediate goods grew at a lower rate of 5.4 per cent and 5.5 per cent respectively compared to 6.6 per cent and 9.8 per cent projected in the Plan. Capital goods import actually declined by 2.2 per cent against the expectation of a 1.7 per cent growth during the Plan. Import of textile goods grew at about 30 per cent in response to higher foreign demand for ready-made garments(RMG) against an average growth of 20.7 per cent as envisaged in the Plan. The commodity structure of imports in the base year (1989/90) of the Plan and that in its terminal year (1994/95) are shown in Table 5.2.

Table 5.2 Merchandise Imports During Fourth Plan Period ( at 1989/90 c. i. f. prices )

( in million US$)

Sl. No

Commodity

Unit

1989/90

(Benchmark)

1994/95

     

Qty.

Value

Projection

Actual

         

Qty.

Value

Qty.

Value

 

FOODGRAINS

mill. tons

1.523

343

0.51

100

2.567

622

1.

Rice

-do-

0.300

102

0.813

276

2.

Wheat

-do-

1.223

241

0.51

100

1.754

346

 

NON-FOOD

3,407

4,700

4,429

1.

Edible oil & 0il

seeds

‘000’ tons

294

131

570

268

548

241

2.

Crude petroleum

-do-

904

125

1,400

193

1,364

188

3.

Petroleum

products

-do-

 

983

197

1,000

200

1,181

236

4.

Cotton & staple

fibre

‘000’

bales

371

137

420

156

381

142

5.

Yarn

mill. lbs.

20

37

35

64

53

98

6. Textiles

288

735

1,028

7.

Fertiliser

‘000’mt.

375

74

775

153

710

140

8.

Cement

-do-

1,606

95

1,800

106

2,200

130

9.

Chemicals

87

150

158

10.

Iron & Steel

177

250

230

11.

Milk & Cream

‘000’ tons

63

88

80

113

22

31

12.

Sugar

-do-

91

44

100

48

147

70

13.

Spices

-do-

11

13

35

41

10

12

14.

Cocoanut oil

-do-

30

22

40

29

4

3

15.

Pharmaceutical products

28

40

30

16.

Dyeing, Tanning,

etc. extracts

29

40

43

17.

Capital goods

1,296

1,410

1,160

18.

Others

539

704

489

 

TOTAL

3,750

4,800

5,051

5.3 Exports

5.3.1 Total exports during the Plan period fell short of the projection by $400 million (3.71 per cent) and amounted to $ 10,392 million. In contrast, the average annual rate of growth of exports was a bit higher at 12.2 per cent than 11.6 per cent envisaged in the Plan as export picked up slowly during the early years. Non-traditional exports grew at a higher rate of 17.2 per cent against the Plan projection of an average annual growth of 16.0 per cent thereby offsetting the shortfall in traditional exports. Ready-made garments fell short of the target which was more than compensated by the knitwear export. Export earning by commodities may be seen in Table 5.3. It may be pointed out that the Fourth Plan experienced some healthy developments in the shares of ready-made garments and frozen food. These two items together grew at an annual rate of 16.79 per cent. However, their share declined from 72.67 per cent of non-traditional export earnings in 1989/90 to 71.28 per cent in 1994/95. Non-traditional exports thus underwent further diversification which reduced the overall risk of price fluctuations. Knitwear, leather goods and the specialised textiles added to this diversification.

Table 5.3 Merchandise Exports During Fourth Plan Period (at 1989/90 f.o.b. prices)

( in million US$)

Sl.

Commodity

Unit

1989/90

1994/95

No.    

(Benchmark)

Projection

Actual

     

Qty.

Value

Qty.

Value

Qty.

Value

  TRADITIONAL

501

487

443

01. Raw jute mill. bales

2.06

125

1.80

108

1.72

103

02. Jute goods ‘000’tons

545

337

525

325

474

294

03. Tea mill. kgs.

22.6

39

31

54

27

46

  NON-TRADITIONAL

1,028

2,163

2,277

01. Leather mill. sft.

157

179

160

182

162

184

02. Frozen food mill.lbs.

48

138

55

158

78

226

03. Readymade garments

609

1,480

1,397

04. Fertilisers ‘000’ tons

144

21

500

74

438

64

05. Naphtha

-do-

59

8

50

7

28

4

06. Furnace oil

-do-

130

11

0

0

129

10

07. Newsprint

-do-

5

3

1.5

1

0.15

negligible
08. Paper

-do-

0.6

1

1

2

0

0

09. Handicrafts

5

8

5

10. Specialised textiles & household linen

4

25

26

11. Knitwear

15

155

237

12. Vegetables

‘000’tons

5.6

8

10

14

8

12

13. Tobacco

-do-

0.5

1

4

2

0.1

negligible
14. Betel leaves

-do-

0.2

negligible

2

3

1.2

2

15. Others

25

52

110

  TOTAL :

1,529

2,650

2,720

  1. Terms of Trade

5.4.1 The terms of trade which deteriorated by 2.6 per cent in 1989/90 improved by 2.3 per cent in 1990/91, 1.4 per cent in 1991/92, 3.5 per cent in 1992/93 and 2.7 per cent in 1993/94, largely as a consequence of a faster growth in the prices of exports in general than imports (Table 5.4). However, 8.9 per cent increase in the import price index against 6.6 per cent rise in the export price index resulted in a deterioration of 2.2 per cent in the country’s terms of trade in 1994/95.