With exports entering the positive zone in November, Commerce Secretary Rahul Khullar on Wednesday hinted that this could lead to withdrawal of fiscal sops given by the Finance Ministry under the stimulus packages to exporters. Talking to journalists here, Mr. Khullar said: “My friends in North Block (Finance Ministry) are having a hard time fixing the budgetary hole. When they get around to fill in that hole, they are going to start drawing back the stuff and the easy target are exporters.” After contracting for 13 months in a row due to recession in western markets, exports rebounded by 18.2 per cent in November. Warning against such a move, exporters said it was too early to withdraw the incentives provided to exporters and it could create a difficult situation for them. “Decision should not be taken on the basis of one month data. No one knows what the trend will be in 2010,” Federation of Indian Export Organisations (FIEO) President A. Sakthivel said.
Referring to exports, Mr. Khullar said the November performance was to be seen against a low base of poor show a year ago. However, the exporters could breathe easy at least till the end of the current fiscal as the government would continue to support them for the next three months.
High fiscal deficit
While the Government extended stimulus package for creating demand in the economy, its finances went out of discipline. The fiscal deficit for the current year is projected at 6.8 per cent of the GDP. The government came to the exporters’ rescue, giving them two per cent interest subsidy and increase in duty refunds on inputs.
The incentives given by the Commerce Ministry to exporters could also be reshuffled depending on the sectoral performance. The decision in this regard would be taken after release of the December figures, the Commerce Secretary said.
