Nath mulls one more relief dose for exporters

RUPEE RISE: IMPACT ANALYSIS

With the dollar falling below Rs 40 today, Commerce and Industry Minister Kamal Nath said the government was contemplating another relief package for exporters.

"Exports are the engines of our growth and we have to ensure they are not affected. We are going to look at it immediately. It's a new situation and a new situation requires a new response," Nath said. Nath plans to discuss the rise of the rupee with the ministry officials.

The dollar today fell below Rs 40 per for the first time since May 14, 1998, as lower interest rates in the US prompted global funds to seek higher returns in fast-growing countries like India.

However, exporters said the government should first implement fully the package already announced. "The government is yet to increase the Duty Entitlement Pass Book (DEPB) rate. The announcement to reduce interest rates by 2 percentage points on export finance has also not been implemented by all banks. The finance ministry has also only partially implemented the service tax exemption on exported goods and services," said an exporter.

The government is targeting a 20 per cent hike in merchandise exports to $160 billion in the current financial year. Exports have risen by 18.2 per cent in the first four months of the fiscal, according to the latest data.

"There's no change (in the target) as of now, but I'm going to review the export target in November," said Nath.

However, analysts say even reaching the $140 billion mark will be a tough task. Credit rating agency Moody's said the rising rupee would intensify the pressure on the country's trade and current account deficits by hindering export growth and encouraging imports.

The trade deficit has widened by 61 per cent to touch $25,619.85 million in the first four months of the fiscal, against $15,841.22 million a year ago, according to official figures.

"The government should intervene and protect exporters. Export-oriented firms have started losing out. Employees in these firms are losing their jobs. All previous measures were half-hearted, but time has come for the government to step in," said Ganesh Kumar Gupta, president, Federation of Indian Export Organisations.