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Hegde flays finance ministry, RBI for short-term vision on export credit rates

Commerce Minister Ramakrishna Hegde today took a dig at the finance ministry stating that the latter has been bogged down by a short-term vision on the effects of reducing interest rate on export credit.

''I had managed to reduce the interest rate on export credit by one per cent last year, but I failed this time to convince the finance ministry to lower it by another one per cent,'' Hegde revealed.

The finance ministry and the Reserve Bank of India, he said, have been bogged down by the short-term visions that a drop in interest rate would result in a drop in revenue, Hegde said, while addressing a meeting organised by the Federation of Indian Chambers of Commerce and Industry in New Delhi.

''What we need today is a long-term conclusion... In the long run, even a one per cent drop would have helped. It is no good if we become penny-wise and pound-foolish.''

''After some time, the finance ministry and the RBI may realise that if exports fall, it will be to the great detriment to the country's economy,'' he added.

The government had, in the Export-Import Policy for 1999-2000 announced yesterday, hiked the pre-shipment export credit rates by 100 basis points to ten per cent for loans up to 180 days from nine per cent.

The government, he added, is working towards further simplification of procedures for exporters by implementing the suggestions and recommendations of several working groups formed for the purpose.

''We have decided to set up some working groups to study the various issues affecting the export sector and for simplification of procedures. Three such working groups have already given their reports and two more will be coming out with their reports shortly... All the suggestions and recommendations of the working groups would be implemented,'' he added.

On the 20 per cent export growth target set by the government last year, Hegde said, the target was set out of exuberance.

''I had not anticipated that the South Asian crisis would continue till the end of this fiscal... As a result, export growth in all countries in this region was dismal. Still in this light, the little one per cent growth in dollar terms is not a mean achievement.''

The commerce minister also appealed to exporters that exports need to be transformed from being cost-oriented to quality-oriented.

Speaking on the occasion, Commerce Secretary P P Prabhu said the ministry would be holding discussions with all the eleven export promotion councils over the next one month to discuss ways of improving exports.

''The objectives of the meeting are three-fold -- first, to analyse the prospects of exports and fixing a target; second, to see what changes need to be made in the policy; and third, to get any suggestions on implementation of the policy.''

He further stated that advance export licences would be issued to status-holders within 24 hours.

Hegde rejects demand for rupee devaluation

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