Working Paper No.: WP 137 Slowdown of the Indian Economy

Of the decline of 6.3 percent in exports during 2019-20, 2.6 percentage points can be attributed to the decline in the global trade for goods, and the rest 3.7 percentage points to the decline in India’s share in global trade, and is thereby attributable to India-specific factors.18 The analysis of quarterly data in Figure 10 shows that the exports slowdown magnified in the last three quarters, an. [...] The slowdown in growth of exports was reflected in most items in the manufacturing exports basket, in the exports to most partner countries, and was accounted for by both the slowdown in the value and volume of exports. [...] (iv) Further Quantifying the Impact of Slowdown of the Exports and Financial Sector In order to further quantify the role of finance and exports in the growth deceleration, we adopt the approach pioneered by Rajan and Zingales (1998) to better understad the role of finance in growth. [...] In a similar vein, we calculate the export intensity of the industries as the ratio of the value of exports to the value of output. [...] The time also seems ripe to rethink the role of the banking sector in financing growth, and in particular, the role and scale of public sector banks, and to enhance the role of well- regulated and well-capitalized private sector banks, while simultaneously facilitating healthy growth of all other segments of the financial markets.