Credit squeeze shackles exports

The rupee depreciated against the US dollar by over 10 per cent in the last 12 months. The sharp erosion in the value of the domestic currency notwithstanding, India's exports continue to stagnate, partially explained by the relative loss of the country's manufacturing sector competitiveness vis-a-vis the favourable currency equation on the external front offered by the depreciating rupee. The problem areas include cost of raw material and overheads such as power, low labour productivity, infrastructure constraints and legal hassles.

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