Union Commerce and Industry Minister Anand Sharma on Monday indicated that the financial stimulus to export sectors that are clocking robust growth could stand withdrawn but said across-the-board abrupt pullout was not desirable.
Speaking at the second India-Arab Investment Projects Conclave organised by Federation of Indian Chambers of Commerce and Industry (FICCI) here, Mr. Sharma said the Finance Ministry could consider withdrawal of stimulus to some exporting sectors which have shown robust growth.
“Those sectors which have moved into a very robust growth level, there we can consider withdrawal of stimulus,” he said when asked whether there was a case for stimulus withdrawal in the budget.
After exports started contracting from October 2008, the government had given certain sops like interest subsidy and higher duty refunds to help exporters. With exports turning positive after 13 months from November 2009 and manufacturing becoming robust with an estimated growth of 8.9 per cent for the fiscal, possibility of stimulus withdrawal is being debated.
Mr. Sharma said while exports had recovered, the revival was not uniform. “There are still sectors such as engineering, leather and textiles which are facing tough terrain in the western markets. We are not for an abrupt withdrawal of stimulus packages,” he said.
He said Finance Minister Pranab Mukherjee was appreciative of the problems of exporters. “I have met with the Finance Minister. I have discussed with him. It is my understanding that he is appreciative of the concerns of the industry,” he added.
India’s exports in April-December 2009-10 dropped by 20.3 per cent to $117.58 billion from $147.56 billion.
Planning Commission Deputy Chairman Montek Singh Ahluwalia was also of the view that the stimulus had succeeded and the Government should begin to phase it out. “Fiscal deficit next year would be lower than that of this year,” he added.
The Federation of Indian Export Organisations (FIEO) is also not opposed to withdrawal of the benefits to those sectors which are now doing well. These include gems and jewellery and pharmaceuticals. “The sectors which have done exceedingly well can be taken out of the stimulus benefit so that those still showing decline or moderate growth can be given focussed assistance,” FIEO President A. Sakthivel said.