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88 Economic Survey 2021-22

and telecommunications equipment showed stagnation or decline, reflecting the recent shortage
of semiconductors.

3.6 As regards global financial conditions, in 2021, inflation picked up globally as economic
activity revived with opening up of economies. Inflation in US touched 6.8 per cent in November
2021, the highest since 1982, driven largely by energy and food prices. As inflation worries
are mounting, a distinct shift towards the unwinding of pandemic-led stimulus is taking hold.
This may result in tightening of financial conditions, adversely affecting capital flows, putting
pressure on exchange rate and slowing down growth in emerging economies. Therefore, the
revival in inflation across the world now poses risks from both a tighter global liquidity condition
and exchange rate volatility in global currency.

3.7 Overall, the balance of risks for global trade is tilted to the downside. The biggest
downside risk emanates from the pandemic itself, particularly with resurgence of new variants
such as Omicron. Further, in addition to the surge in global inflation, as outlined above, longer
port delays, higher freight rates, shortage of shipping containers, shortage of inputs such as
semiconductors, with supply-side disruptions being exacerbated by recovery in demand, pose
significant risks, inter alia, for global trade.

3.8 Against this backdrop, India’s external sector has shown immense resilience during the
year, which augurs well for growth revival in the economy.

DEVELOPMENTS IN INDIA’S MERCHANDISE TRADE

Merchandise Exports

3.9 Following the global trend, India’s merchandise exports recovered strongly from the
pandemic-induced collapse and registered positive growth in the current financial year. During
2021-22 (April-December), the merchandise exports recorded growth of 49.7 per cent to US$
301.4 billion, compared to corresponding period of last year and 26.5 per cent over 2019-20
(April-December), exceeding the pre-pandemic levels.
3.10 Out of an ambitious export target of US$ 400 billion set for 2021-22, India has already
attained more than 75 per cent of it by exporting goods worth US$ 301.4 billion, which is
actually higher than the export target of US$ 300 billion set for the April-December period of
2021-22. This shows that India is well on track as far as attaining the export target is concerned.
Sharp recovery in key markets; increased consumer spending; pent up savings and disposable
income due to announcement of fiscal stimulus by major economies; global commodity price
rise and an aggressive export push by the government have bolstered exports in 2021-22.

3.11 After bottoming out in Q1: FY 21, there was an impressive rebound in merchandise
exports, with strong y-o-y and sequential growth, crossing a milestone of US$ 100 billion in Q2
and Q3 of 2021-22 (Figure 4a). This is remarkable in view of moderation in global trade growth,
elevated shipping rates and persistent problem of container shortages.