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Both the domestic value added (DVA) content and the employment intensity of exports has been declining over time for India. To overcome this, a dramatic increase in the absolute size of exports was essential to match or exceed the spill-over effect of exports as seen in the past, suggested Crisil in a report ahead of new export policy.
“We analyze these patterns in comparison with China in our latest report, using the OECD value-added database”, Crisil said.
The Union Government is expected to unveil the foreign trade policy for the medium term in a few weeks. “This time around, the exports bar will need to be set much higher even to simply maintain the impact of exports on job creation and income generation”, the rating agency pointed out.
“Gross export numbers are misleading in terms of the impact they have on jobs and incomes. Broadly, the spill-over impact of exports on the domestic economy is determined by three factors – the DVA component of exports, the employment intensity of export sectors and the absolute size of exports – all of which determine the extent of job-creation”, it added.
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