Bikky Khosla | 16 Jul, 2019
the importance of exports on a country's economy, the latest Economic Survey
said rightly that when an economy is in a virtuous cycle, investment,
productivity growth, job creation, demand and exports feed into each other. But
unfortunately, the Budget 2019 lacks any comprehensive measures for the export
sector. No doubt, several large-scale infrastructure
activities proposed in the Budget will give an indirect push to exports, but
lack of specific initiatives for the sector is not welcome.
According to a recent media
report, exports during the first term of the Modi government grew
by 12.61 percent in comparison to a whopping 69 percent during the
Manmohan Singh government in its second term. Merchandise exports, against a
flat growth rate under the Modi 1.0 government, had grown 75 percent under UPA-II
government while services exports had grown 69 percent against 30 percent in
Modi's watch. We, however, cannot ignore the fact that exports have faced
rising protectionism and a global economic slowdown since the last five years.
according to some experts, there are some other major challenges that are
hindering exports growth, and the most prominent among them is high costs.
Indian exporters have to deal with high costs of labour, capital, electricity,
railway freight rates, air freight, corporate and income tax rates, and as a
result they cannot compete with their Asian peers. The
Budget 2019 reduced the corporate tax rate (CTR) from 30 percent to 25 percent for all firms with
a turnover of Rs 400 crore, but according to economy watchers, CTR in
many Asian countries has already fallen to 15-20 percent.
Budget --some analysts view-- has failed to address these issues. According to them,
this signals that tax holidays for the export sector may end soon, but before
doing that the Centre must do the needful to create a friendlier environment
for our exporters. The Economic survey clearly views that India should focus on
increasing its global trade share and that the Centre should work on
implementing the suggestions of the High Level Advisory Group on exports,
chaired by Dr Surjit Bhalla.