‘Stimulus’ package for economy, bailout for exporters

Font Size

Print

Feedback

Email

Discuss

• Discount UK Shopping

Related Articles

US to review duty on shrimp importsSpices export dip 5% on low demandRevised export data leaves officials baffledTough to meet $200 mn export target this year

New Delhi , Nov 11 : Reacting with alacrity to India ‘s exports dropping by 15% in October, the Centre is preparing a ‘stimulus package’ on a war-footing basis to avoid a possible contagion effect on industrial production and the financial system.

Declining export volumes as well as serious of trade finance problems have led to the high-powered crisis committee constituted by Prime Minister Manmohan Singh meet on a daily basis since Friday.

Emerging from the panel’s meeting on Tuesday, a senior government official indicated that the ‘stimulus’ package could include massive spending by the government in the infrastructure sector, further measures by the Reserve Bank of India to reduce lending rates, interest free loans for small and medium enterprises (SMEs) in the worst-affected sectors, and relief measures for exporters.

The ‘stimulus’ proposal comes two days after China announced a similar $586-billion package that included increased government spending on infrastructure, higher subsidies for farmers and tax deductions for embattled exporters.

“We are considering a stimulus package that does not have a contagion effect. The worst is not over yet. The pain will go on for some more time. There is no denying of this by the government. The timing of the package’s announcement will, however, be a political call,” the official said, hinting that the ensuing general elections will be an additional factor for policymakers.

Among the proposals to ease the lot of exporters are renewing the recently-expired interest subvention scheme; extending post-shipment credit from 90 days to 270 days and most importantly, asking banks to give credit in dollars instead of rupees, especially to small-and medium-scale exporters.

Top officials said the government could have addressed the problem if it were institutional-related. Since the current problem being faced by exporters is arising mainly due to the demand slowdown in US and EU, sources said it was difficult for the government to take any steps that will result in any increase in demand in the West.