The currency and continuing disruptions due to demonetisation and GST remain to haunt the economy despite some contrary beliefs that a strong rupee is good for the economy as it makes imports cheaper.

While India’s exports grew by 11.2 per cent, imports rose in April-November 2017, recording a growth of 22.4 per cent in FY17, however, on the other hand, imports were almost steady and grew by just 0.9 per cent.

Hardening crude oil prices resulted in imports growing at a faster rate than in FY17; for two earlier years, oil imports contracted in value terms. While oil imports rose by $11.7 billion in April-November, overall imports grew by $54.5 billion.

If one exempts gold and oil, it shows that, for the April-November period, FY18 imports grew by a phenomenal 29.8 per cent; in contrast, during FY17, non-oil non-gold imports rose a marginal 1.4 per cent.

Since consumer demand hasn’t grown in the first eight months of FY18, one can assume that increased imports have largely replaced domestic supplies, either because local supply chains continue to be hit and/or because, with the rupee continuing to strengthen, imports have become 5 to 6 per cent cheaper.

In FY17, the rupee was more stable (66.2 to the dollar) on January 3, 2016; 68.14 on January 2, 2017; and 63.69 on January 1, 2018. With the current account deficit currently looking troubling and estimates show it at over 2 per cent of the GDP for FY18, this is definitely a cause of concern for the government. This is where issues like India’s high interest rates come in since they make India more attractive for foreign debt money.

The same supply-chain problems, along with the rupee, are clearly affecting India’s exports. Crisil noted that while India’s exports grew be 9.5 per cent in April to October 2017, Vietnam’s exports rose by 23.8 per cent, South Korea’s by 18.5 per cent, Indonesia’s by 17.8 per cent in the same period, however, at 7.4 per cent, China’s exports grew slower than India’s but the base is so much higher.