Govt cuts exporters' subsidy by Rs 600 cr

[K.Karthik Raja]

The Government has slashed allocations to its key export promotions
and overseas market development programmes for 2008-09 by a huge Rs
600 crore.

This comes when exporters are facing a rough weather on account of
global slowdown and margin erosion due to rupee appreciation.

The Union Budget for 2008-09 has cut export subsidy by Rs 300 crore
while abolishing interest subsidy under the programme 'Assistance for
Export Promotion and Market Development'.

As against the revised estimates of Rs 1,594 crore for 2007-08, export
subsidy has been reduced to Rs 1,294 crore for 2008-09.

As regards interest subsidy to banks, no provision has been made for
the next fiscal.

The government had provided Rs 300 crore as interest subsidy to banks
for the current year.

To the disappointment of the Commerce Ministry, its overall budget for
the next fiscal has also been cut from Rs 3,771 crore (actuals) to Rs
3,520 crore.

Upset with the Budget proposals relating to the export sector,
Commerce and Industry Minister Kamal Nath had met Prime Minister
Manmohan Singh earlier this week seeking fiscal and other measures for
the distressed exporters.

Finance Minister P Chidambaram had said in Budget 2008-09 that the
interest cost of sterilisation through market stabilisation bonds,
estimated at Rs 8,351 crore for the whole year, was "in a sense
subsidy to the export sector".

However, exporters disagree with this contention.

Exporter body Federation of Indian Export Organisations had also
expressed dissatisfaction with the Budget proposals, stating that
their concerns were not adequately addressed.