Despite recognising global challenges to India’s exports, the RBI in its monetary policy has not taken any specific measure to help the sector, according to the Federation of Indian Export Organisations (FIEO).
The RBI has indicated that the global challenges — including modest recovery in the US, sovereign debt problems looming over Euro zone and declining growth in emerging and developing economies — will put further pressure on exports.
However, the FIEO added that the central bank has not taken any significant step to give a fillip to exports, such as augmenting the availability of Packing Credit in Foreign Currency (PCFC) for micro, small and medium-sized export firms; extending interest subvention for rupee credit; increasing the share of export credit in net bank credit; and rationalising increasing banking charges.
Mr M. Rafeeque Ahmed, President, FIEO, has asked the Commerce, Industry and Textile Minister. Mr Anand Sharma, to restore interest subvention for exports immediately with effect from April 1, 2012.
Commenting on the RBI’s move to reduce lending rates by 50 basis points, FIEO said this was anticipated with the fall in GDP growth to 6.1 per cent (in October-December, 2011), decline in Index of Industrial Production to 4.1 per cent in February and an increasing current account deficit as well as trade deficit.
Besides, the FIEO said 13 policy increases to rein in inflation in the last two years took policy rates from 4.75 per cent in March 2010 to 8.5 per cent, as well as maintaining a status quo in the last three reviews, have impacted growth.
RBI could have attempted a steeper cut in policy rates to boost manufacturing and demand, Mr Ahmed said.
The National Manufacturing Policy envisages that manufacturing would be brought to 25 per cent of GDP by 2022 against 10-12 per cent in the last decade or so.
“But with working capital loan available at 16-17 per cent, industry can hardly afford expansion and modernisation of production facility. This requires innovative financing, besides, focus/expansion of cluster and linkage financing,’’ he said.