Incremental export sop goes

With the economic downturn and the sharp fall in other Asian currencies, Indian exporters have found it tougher to compete in international markets and it was unlikely they could exceed last year8217;s figures, a commodities exporter said, adding, 8220;Few exporters will be able to touch the 1997-98 levels, leave alone exceed them. Where is the question of gettingconcessions?8221; 8220;After taking into account various views expressed by exporters, the Reserve Bank of India has decided to drop the scheme of concessional credit for incremental exports. This scheme will no longer be implemented. Banks are being advised accordingly,8221; a central bank release said.

Bankers had cited various operational problems regarding calculation of incremental exports while exporters had complained it meant 8220;nothing8221; for them as exports had shown a negative growth during the year. They also lobbied against it as they thought only the smaller export houses were to benefit while large export houses would have to float quot;dummyquot; companies to avail of the concessional credit.

Granting the maximum concession to those exceeding their previous figures meant that some were rewarded for doing badly last year, said an exporter. 8220;For some exporters, 1997-98 had been a boom year, and ironically it is those who did badly who stand to benefit by this scheme, since they can easily exceed last year8217;snumbers,8221; said an exporter.

On the other hand, exports failed to pick up. During May alone, exports recorded a negative growth of 17.22 per cent. The export growth in 1997-98 was a dismal 2.64 per cent compared with double-digit growth rates in the previous three years.

After announcing the draft operational guidelines for the scheme in the last week of June, the Reserve Bank had a series of meetings with bankers and exporters. 8220;While one section of the exporters welcomed the proposed scheme, the others pointed out that the scheme 8212; as it is conceived now 8212; will not help much, particularly those exporters who for various reasons were not able to increase their exports over 1997-98 level. It was also pointed out that calculation of incremental8217; exports may be operationally difficult, even though in the draft scheme care had been taken to value exports only in rupee terms,8221; the RBI said. 8220;The Reserve Bank8217;s decision to scrap the concessional credit scheme for incremental exports highlights the follyof announcing policies without getting feedback from the players in the market. The scheme had many loopholes, such as exports being routed through shell companies which had no exports in the previous year, and calling it incremental exports8217;,8221; said a banker.