Stimulus package for exports, housing & steel

The package is expected to be fine-tuned at a late evening meeting which is expected to be attended by Mr Nath himself and deputy chairman Planning Commission Montek Singh Ahluwalia and Cabinet Secretary K M Chandrashekhar. Earlier it was reported that exporters who have purchased export credit protection are set to get an additional dole-out from the government over and above the cover they have already bought. The government is expected to come out with a Rs 350-crore additional package for exporters soon. This will be in addition to Rs 5,000-crore refinance package announced earlier in the month by the Reserve Bank of India for Exim Bank to provide liquidity support to troubled exporters. The funds will be used to provide export credit insurance cover to exporters over and above the protection provided by Export Credit Guarantee Corporation, ECGC executive director S Prabhakaran said at a CII seminar. “Exporters who have ECGC cover will get an additional 10% of money depending on the type of cover. It will cover those entities who are covered by the MSMED (Micro Small and Medium Enterprises Development) Act,” Mr Prabhakaran said. While the details of the package are still being worked out, the non-SME beneficiaries from the package are likely to be from sectors such as textiles, gems and jewellery and leather. The list is expected to cover the list of beneficiaries in detail, he added. One of the fall-outs of the financial crisis in most western markets since September this year is that many Indian exporters saw a dip in demand and had to cancel order. For the first time in several years, the country’s exports saw an absolute dip in exports during October this year. Many even faced payment and credit problems, leading them to enforce their claims with the credit insurer. Many have also been facing problems because of a volatile rupee. Mr Prabhakaran said the Corporation has seen the size of claims going up, but added resource-wise it was comfortable and will not increase the premium. “We are having a comfortable claim to premium ratio.” Mr Prabhakaran said ECGC is not shunning new entrants seeking a cover. Instead, it is encouraging exporters to go for turnoverbased policies instead of transaction-based policies and ensuring that exporters go for a long-term protection rather than a selective cover. Unlike in India many commercial entities like COFACE have already indicated their unwillingness to take on exposures in countries like UK, USA, Ireland, Iceland and Italy.