Commenting on the unchanged policy rates by RBI and declining exports, the exporters body FIEO, Tuesday called for expeditious and time bound implementation of the Reserve Bank of India's Padmanabhan Committee recommendations to put exports and economy on track.
"What, perhaps, is required are immediate measures to be taken such as implementation of the Padmanabhan Committee recommendations (Set up by RBI ) which inter-alia are inclusion of exports in priority sector lending," said M Rafeeque Ahmed, President, Federation of Indian Export Organsiations (FIEO).
The Committee has made recommendations relating to i) review of Gold Card Scheme for extension of export credit to exporters, ii) appropriate inclusion of export finance under the Priority Sector Advances for scheduled commercial banks, iii) raising of foreign currency loans on pool basis for extension of export credit to exporters, iv) allowing factoring on non recourse basis, v) liberalization of merchanting trade, vi) financing to units in Domestic Tariff Area (DTA) / Special Economic Zone (SEZ), vii) more incentives in the area of taxation benefits and subvention, viii) denomination of export credit limit in foreign currency, ix) simplification of hedging procedure, etc.
He also said, "Buyers credit to be made increasingly available, and the cap of USD 20 million for Trade Credit may be raised in deserving cases; A Double Tax Deduction Scheme as is available to exporters in Singapore; etc."
"All these measures besides others will help the export sector and thus needs to be implemented expeditiously in a time bound manner," added Ahmed.
President, FIEO, while commenting on the unchanged policy rates stated that a focus on the rupee stability rather than other economic woes of plunging GDP numbers as also IIP have guided the decision to maintain status quo.
FIEO Chief stated that RBI's decision may take a toll on growth and push the economy further into the abyss with bank credit growth at the end of June was a mere 13.7 percent; industrial production over the last two years grew at a poor 0.8 percent (the April IIP was up 1.9 percent, but that was on top of a decline of 1.3 percent in industrial production in April 2012. Mayâ€™s contraction, on the other hand, was on top of a 2.5 percent rise in industrial production in May 2012.
President FIEO while commenting on the export scenario stated that: Exports in June 2013 fell 4.56 percent, compared with June 2012, when, in turn, they had fallen 5.45 percent compared with June 2011. In absolute numbers, exports in June 2013 were $23.79 billion.
"Compare that with the level of $26.51 billion two years agoâ€”in June 2011â€”and you can see the declining export performance. The rupee depreciation doesnâ€™t seem to have helped so far, perhaps because itâ€™s not just the rupee but also other emerging market currencies that have depreciated against the US dollar. However there appears to be a silver lining as export orders have picked up pace in May and June," he added.
FIEO chief stated that India possesses the right ingredients to achieve double-digit growth and has shown impressive growth averaging 8.7 percent during 2003-07 during the five year period prior to the crisis, placing it amongst the worldâ€™s best performing economies and we are certain that given the policy measures initiated we would well be achieving targets necessary to put us back on a growth trajectory.