Exports decline, Electronics trade, Mixed trends in life and general insurance...
This Week In Data #61
In this edition of This Week In Data we discuss:
Decline in exports and imports in March
Trade deficit continues to trend lower
Electronics exports offsetting the rise in imports
Recovery in life insurance sector in value but not volume terms
Single digit growth in general insurance sector
India’s exports declined 1% in March YoY as per the quick estimates released this week. This comes on the back of double-digit growth in February (which was partly boosted due to the leap-year effect). Imports however declined 6% YoY. Consequently, the trade deficit declined to below US$16bn the lowest since April last year as per the quick estimates. The rupee’s outperformance in recent weeks in part owes to this moderation in the trade deficit. It is quite likely that India’s overall trade deficit (goods + services) during March would have been a modest US$1bn.
The decline in exports was entirely due to lower Petroleum exports. Petroleum product exports declined by over a third and excluding them Exports rose 8% in March. Chemicals exports grew almost 40% YoY in March while Electronics rose 23% YoY. Pharma and Engineering exports also rose in double digits. The decline in imports though was more broad-based. While Petroleum imports declined by 4%, non-oil imports declined by almost 7% YoY. Coal, Chemicals, Plastics, Transport Equipment, Iron & Steel, and Gems & Jewellery also saw imports decline in March.
For the full year FY24, India’s electronics exports rose 28% YoY as against a 3.5% decline in total exports. Electronic Imports on the other hand grew by 22% YoY. Electronic exports have grown faster than Imports in 5 of the last 6 years. This though is not surprising given the low base of exports. Despite electronics exports having risen by more than 3x in the last 5 years, they are still less than a third of imports which totalled almost US$90bn in FY24.
The rise in electronic exports though is largely attributable to Government policy, specifically the PLI scheme. In that context, it is worth noting that over the last 5 years, India’s net electronic imports have grown by just 5% YoY, down from 14% growth in the preceding 5-year period. And growth in imports too has moderated – from 11.4% growth between FY14-19 to 10.1% in the last 5 years. So, exports have accelerated without growth in imports having picked up and therefore the growth in net imports has slowed down dramatically.
The life insurance sector is seeing an uptick in growth. New business premiums (NBP) collected grew 26% during the March quarter, the highest growth in the last 6 quarters (since 3QCY22). The uptick is largely due to LIC where NBP grew by over a third during the March quarter. In contrast for the other insurers, NBP grew 16% YoY.
The recovery in growth though is largely in terms of the value of premiums. In terms of number of policies sold, the industry is still below its peak. During the March quarter this year, a total of 10.3 million policies were sold. This is 5% higher than the number of individual policies sold during the March quarter last year. However, it is 10% lower than the number of individual policies sold during the March quarter of 2021. This decline though is largely for LIC. Other insurance companies have continued to grow in terms of policies sold also during this period.
The general insurance sector though is seeing growth decelerate. The March quarter saw premiums grow 9% YoY, the slowest growth in the last 6 quarters. Among the larger sectors, Motor insurance has seen growth decelerate to single digits during the March quarter while for Health insurance growth has remained strong at high teens. Crop insurance also had a weak quarter with premiums declining 15% during the March quarter, the weakest performance in over 3 years.
That’s it for this week. But here’s a trivia. Which item of men’s bottom wear do you think has become more expensive in the last 5 years – Traditional (Dhoti) or Western (trousers, shorts)? Answer in the next week’s edition…