Indian Budget: A Missed Opportunity Depresses Apparel Exporters

The big mandate that the Indian public had given to Dr. Manmohan Singh led Government stands seriously undermined with a single stroke of Budget Proposals announced on the floor of Indian Parliament on 6th July. The disappointment was so spontaneous that hardly had Finance Minister finished reading his Budget speech that the Opposition Members of Parliament got up to protest against the Budget Proposal. So immediate and strong was their reaction that a history was created when the House had to be adjourned immediately after the presentation of the Budget for the next day. The loss of goodwill generated by the mandate seemed to evaporate in thin air.

To my mind, the Finance Minister, despite of decades of parliamentary experience, failed to read the minds of the people and was probably guided by the political considerations that far outweighed the serious economic concern that the global economic recession with major economies in a state of acknowledged depression should have brought about. He has preferred to let go the fiscal deficit shoot up to 6.8% of GDP for what was essentially a social Budget.

Nearer home, I would like to point out that the Indian apparel exporters feel seriously let down. They had built up high hopes, which were not unjustified at all; in fact, the long list of expectations and appeals made by the apparel exporters was indeed the minimum most what should have been done by the Government. This was more so when the trade bodies like Apparel Export Promotion Council and Garment Exporters Association have repeatedly been asking for. A recent presentation made by AEPC to the Finance Minister himself, was eloquent and substantive enough to make any Finance Minister sit up and think that here is a case, which calls for urgent support from the Government.

In fact, the detailed presentation listed out, with valid justification, a number of recommendations, which included realistic duty drawback rates, re-introduction of benefit of Section 80 HHC of IT Act, exemption of Fringe Benefit Tax, income tax relief on R&D, Market Linked Focus Product Scheme, rationalization of Excise duty, availability of export credit, interest-free loans for investment in machinery with zero duty import of capital goods, exemption from State levies, moratorium of loans for two years, prime lending rate for T&C industry, exemption of Customs duty on industrial garment machinery, allocation of enhancement of MDA etc.

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