Economic Slowdown: Fin Min Prescribes Tonic

50,000 CT for Export Incentive Schemes

By The Newsroom Network On Sep 14, 2019

New Delhi: Union Finance Minister Nirmala Sitharaman on Saturday announced a new scheme — Remission of Duties or Taxes on Export Product (RoDTEP) — to incentivise exporters at an estimated cost of Rs 50,000 crore to the exchequer.

The announcement comes in the backdrop of India’s merchandise exports declining by 6.05 per cent to $ 26.13 billion in August compared to the year-ago month. The Minister also said there will be a fully automated electronic refund route for input tax credits (ITC) in GST. This will be implemented by the month-end.

The move, she added, is aimed at quick and automated refunds of ITC. She said RoDTEP will replace the existing incentive schemes and “will more than adequately incentivise exporters than the existing schemes put together”.

The Minister said the revenue foregone towards the scheme is projected at Rs 50,000 crore.
Revised priority sector lending scheme.

She has also announced revised priority sector lending (PSL) norms for exporters which will release an additional funding of Rs 36,000 crore to Rs 68,000 crore to them.
PSL norms for export credit have been examined and enabling guidelines are under consideration of the Reserve Bank of India, she said. “This will release an additional Rs 36,000 crore to Rs 68,000 crore as export credit under priority sector,” Nirmala Sitharaman told reporters here. She also said export finance will be actively monitored by an inter-ministerial working group in the Department of Commerce.

Also, Export Credit Guarantee Corporation (ECGC) will expand the scope of export credit insurance scheme. The Minister said the initiative is expected to cost Rs 1,700 crore annually and will enable reduction in overall cost of export credit including interest rates, especially to MSMEs.

Mega shopping festivals
She also announced that Free Trade Agreement (FTA) Utilisation Mission would be set to help exporters optimally utilise the concessional tariffs under trade pacts which India has signed with several countries. Besides, annual mega shopping festivals will be organised in the country at four places focusing on sectors like handicraft, yoga, tourism, textiles and leather.

Inflation under control
Finance Minister Nirmala Sitharaman said inflation is under control and there is a clear sign of revival of industrial production and she added inflation has been kept “very much” below 4 per cent.

The government has mandated the Reserve Bank of India to keep the retail inflation in the band of 2-6 per cent. The latest inflation print based on Consumer Price Index was 3.21 per cent in August.

The Minister further said that in spite of all worries on industrial production front in the fourth quarter of 2018-19, “we see clear signs” of improvement up to July 2019. She further said the steps announced to increase credit flow to NBFCs, including the partial credit guarantee scheme, has started showing results. “Several NBFCs have benefited,” the Minister said.
Nirmala Sitharaman also informed that she will be meeting heads of public sector banks on September 19, a day before the GST Council meeting in Goa, to access the credit flow scenario to the economy.

The government has mandated the Reserve Bank of India to keep the retail inflation in the band of 2-6 per cent. The latest inflation print based on Consumer Price Index was 3.21 per cent in August.