{"id":239724,"date":"2023-04-26T19:56:17","date_gmt":"2023-04-26T14:26:17","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=239724"},"modified":"2023-04-27T18:03:28","modified_gmt":"2023-04-27T12:33:28","slug":"get-real-with-targets-on-foreign-trade-policy","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/get-real-with-targets-on-foreign-trade-policy\/","title":{"rendered":"Get real with targets \u2013 on foreign trade policy"},"content":{"rendered":"\n

Source<\/strong>: The post is based on the article\u00a0\u201c<\/strong>Get real with targets<\/strong>\u201d published in Business Standard <\/strong>on\u00a026th<\/sup> April 2023<\/strong>.<\/p>\n

Syllabus: GS 3 \u2013 Economy \u2013 Industrial Policy<\/strong><\/p>\n

Relevance: <\/strong>concerns associated with <\/strong>the foreign trade policy 2023.<\/p>\n

News<\/strong>: The government announced a new foreign trade policy last month.<\/p>\n

What are the concerns with the new foreign trade policy?<\/strong><\/h2>\n

The new policy has set a target of achieving exports of goods and services worth<\/strong> $2 trillion by 2030.<\/p>\n

Therefore, in order to meet the target of $2 trillion by 2030, a compound annual growth rate (CAGR<\/strong>) should be 14.61 percent during this seven-year period.<\/p>\n

This means the share of goods and services exports in India\u2019s gross domestic product (GDP<\/strong>) should increase from 23 percent in 2022-23 to over 28 percent in 2029-30.<\/p>\n

However, the CAGR for exports of goods and services in the last 10 years was a little less than 6 percent<\/strong>.\u00a0Therefore, in such a scenario, these aspirational targets look challenging.<\/p>\n

Must Read: <\/strong>India\u2019s New Foreign Trade Policy (FTP) and its significance \u2013 Explained<\/strong><\/a><\/p>\n

What are the drawbacks of establishing such an export target?<\/strong><\/h2>\n

Unachievable Targets:<\/strong> The foreign trade policy in 2015 had set a target of 11.6 percent CAGR from $466 billion (merchandise goods and services) in 2013-14 to $900 billion 2019- 20.<\/p>\n

However, the actual performance during the period<\/strong> of the 2015 policy was a disaster, with exports between 2014-15 and 2019-20 showing a CAGR of just 2 percent.<\/p>\n

Therefore, the government has not learned from experience and has again set the export target in the new foreign policy.<\/p>\n

Overtaking Roles:<\/strong> It has been argued that the government should not get involved in setting export targets because exports are done by companies not by the government.<\/p>\n

Instead, the government\u2019s job should be to create a conducive environment for higher exports through a supportive policy.<\/strong><\/p>\n

Lack of Accountability:<\/strong> The government set fiscal deficit target and it is held accountable for that because a fiscal deficit target is all about how the government goes about raising its revenues and spending on various schemes.<\/p>\n

Whereas exports have to be achieved by exporters<\/strong> and hence the job of meeting a target should be seen as a success or failure on the part of the exporting community.<\/p>\n

Hence, these kinds of targets free the government from being held accountable.\u00a0<\/strong><\/p>\n

For instance,<\/strong> nobody was held accountable for the failure of the foreign trade policy of 2015 in meeting the exports target of $900 billion to be achieved by 2019-20.<\/p>\n

What can be the way ahead?<\/strong><\/h2>\n

First,<\/strong> the government should not worry about setting targets for exports and instead, it should focus on ways domestic policies are framed to make exports more competitive.\u00a0<\/strong><\/p>\n

Additionally, attention should be paid to how exchange rate regulations<\/strong> may benefit exporters by bringing them closer to the real effective exchange rate and how import tariffs can be reduced<\/strong> effectively to lower exporters’ costs.<\/p>\n

Second,<\/strong> if the government wants to set a target, it should not be for a period of five or seven years. The target should be annual,<\/strong> which could be monitored at the end of the year, and based on the performance, the goals could be revisited.<\/p>\n","protected":false},"excerpt":{"rendered":"

Source: The post is based on the article\u00a0\u201cGet real with targets\u201d published in Business Standard on\u00a026th April 2023. Syllabus: GS 3 \u2013 Economy \u2013 Industrial Policy Relevance: concerns associated with the foreign trade policy 2023. News: The government announced a new foreign trade policy last month. What are the concerns with the new foreign trade… Continue reading Get real with targets \u2013 on foreign trade policy<\/span><\/a><\/p>\n","protected":false},"author":10320,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,9],"tags":[10503,11348,216],"class_list":["post-239724","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-public","tag-business-standard","tag-foreign-trade-policy-2023","tag-gs-paper-3","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":"","cached_date":1704650963},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/239724","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10320"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=239724"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/239724\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=239724"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=239724"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=239724"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}