RBI announcement today: RBI’s announcement for exporters welcome but problem is far bigger: EEPC

The RBI has decided to increase the maximum permissible period of pre-shipment and post-shipment export credit sanctioned by banks from the existing one year to 15 months, for disbursements made up to July 31, 2020. The RBI’s extension of time limit for pre and post-shipment export credit sanctioned by banks along with reduction of 40 basis points in the repo policy rate would ease exporters’ distress , but the problem is far greater, posing existential crisis for the export sector, said Engineering Export Promotion Council (EEPC) in a release issued on Friday.

As RBI governor Mr Shaktikanta Das has clearly stated in his policy statement that the global economy is ”inexorably headed into recession”, much more needs to be done for the highly employment-oriented export sector. While the moratorium and working capital relaxations are welcome, exporters would need direct fiscal support for staying alive in business. These measures can be in the form of waiver of electricity user charges, reduction of levies at the ports,freight support and wage support for workers.

The RBI has decided to increase the maximum permissible period of pre-shipment and post-shipment export credit sanctioned by banks from the existing one year to 15 months, for disbursements made up to July 31, 2020 . This should ease pressure, but the liquidity transmission along with reduction in interest rates should be effected in a swift manner by banks, without being obsessed too much with ‘ case to case approach’.

Source: indiatimes.com