Currency Devaluation and Exports

Devaluation-led export growth takes place by reducing black-market premium. The initial optimism regarding the growth in exports during the early years of liberalisation gradually waned after some period of devaluation. Export growth, reported in Indian official trade statistics, came down to actual export growth, reflected in partner country's trade statistics. An explanation like this is derived for India's recent nose-diving export growth. The study is undertaken for the period 1951-94, using US imports statistics. It has been shown that the impact of devaluation in 1966 and 1991 was actually felt on officially reported exports to US and not much on US imports from India.