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RBI to set up task force for diamond sector resurgence

The Reserve Bank has announced the formation of a task force,consisting of the representatives of the state government...

Written by ENS Economic Bureau | Mumbai |
February 13, 2009 12:59:25 am

The Reserve Bank has announced the formation of a task force,consisting of the representatives of the state government,the state level bankers committee (SLBC) convener and other bankers in order to look into distress arising on account of problems faced by diamond industry in Gujarat and make practicable recommendations for mitigating the difficulties.

The RBI will be the convener of the task force which will submit its report not later than February 28,2009. The diamond industry has been seeking a financial package from the RBI and the government for revival of diamond units. The RBI made this announcement after the its central board met in Ahmedabad on Thursday. The meeting reviewed key economic,monetary and financial developments and the various steps taken since mid-December 2008 to preserve financial stability and arrest the moderation in the growth momentum in the context of the ongoing global financial crisis and the deepening recession in major economies of the world.

The RBI move follows steep fall in diamond sales,closure of units in Gujarat (mainly Surat) and large scale layoffs. Sales were down by over 30 per cent in the US,the largest diamond jewellery market in the world,in the last two months. It’s expected to fall further as consumer demand in major foreign markets has taken further beating recently. Out of 2,500-3,000 diamond units which were operational in and around Surat,50 per cent of the units have shut down.

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