Tuesday, March 27, 2012

Mapping provincial interests to international trade

In an earlier post I had highlighted the mapping of the benefits of international trade to the "sub-national level" in the context of the USTR. Normally the impact of  international trade is analysed in terms of the benefit a country derives at the national level. However in a federal system such as India it would be useful to go to the next level of governance - the States and see how international trade has an impact on employment and growth at the State level as well as the dependency of the businesses at the State level on international trade.

The USTR website has the benefits of trade mapped to individual states. The Economic Survey of India 2011-2012 details out the exports of 15 states in India. It also highlights the inter state variance in growth as well as the difficulty in obtaining data about exports relating to the origin of states.
"Policy for Promoting State-wise Exports
7.45 Two States, namely Gujarat and Maharashtra,account for 46 per cent of exports from India as per the data on state of origin of exports of goods. If Tamil Nadu, Karnataka, and Andhra Pradesh, the next three states with more than 5 per cent share, are added to the top two, the share of the top five states would be 65.7 per cent. In 2010-11, the growth of exports from states was robust. Only Goa had negative export growth due to fall in ore exports owing to a ban on exports of iron ore by the Karnataka government. High export growth was registered by Odisha followed by West Bengal and Gujarat. In the first half of 2011-12 there was robust export growth in case of Karnataka, Uttar Pradesh, and Tamil Nadu.
7.46 The state-wise exports given in Table 7.16 are only indicative as there are many weaknesses in the data. These include the following. The figures are compiled as per the reporting from customs and no validation is done at the DGCI&S end. Only one state of origin code can be given by the exporter in a single shipping Bill. In case of shipping bills with multiple invoices containing items originating from more than one state, there is no provision for making different entries. In the customs daily trade returns (DTRs) the non-reporting of state of origin (STON) is considerable and exporters have a tendency to report the state to which they belong/ the state to which the port (through which the export has taken place) belongs/ the state from where they ‘procured’ the goods as the state of origin for those particular goods instead of the actual state of origin of goods. The problem is acute in the case of non-manufacturing exporters, who only know the place of procurement and not production of the goods. These weaknesses need to be rectified to improve the quality of data."
Building a state-specific database of exports and imports would help in analysing the benefits of global trade on sub-national interests. Since many domestic policies are driven by the provincial governments, this analysis would be useful to make meaningful domestic policy at the provincial level that can assess and utilise the benefits international trade offers. It would also require a high degree of co-ordination between the central and provincial governments. In the Indian context while there is a lot of debate at the national level about the multilateral trade rules and their impact on the domestic economy, similar interest and engagement at the provincial level is not seen. Only a joint collaboration of all tiers of government domestically can effectively engage with the international trading system and take advantage of the rules to create employment, growth and trade at the local level.

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