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Last-mile gambit

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17.09.2019

In another episode of sector-specific reforms to arrest the current economic slowdown, finance minister Nirmala Sitharaman announced measures to revive growth in the housing sector and to push for greater exports.

The measures featured: an ease in foreign borrowing norms for those looking to invest in affordable housing projects; Rs 20,000 crore for last-mile funding of housing construction, and significant changes in tax-exemptions up to the range of Rs 50,000 crore to benefit exporters in.

Niramala Sitharaman has announced a last-mile Rs 20,000 crore package with a target to benefit around 3.5 lakh homeowners. (Photo: Reuters)

Downside in exports

A new scheme, the Remission of Duties or Taxes on Export Products, will replace the Merchandise Export from India Scheme (MEIS). While this step will lead to a revenue foregone up to the range of Rs 50,000 crore, the effect of this in boosting exports, especially in areas of textile (of non-readymade garments), remains unclear.

A closer look at the Indian exports may help one acknowledge that the last few years have seen a negative Current Account Balance, with a poor export performance trend. In fact, over the last five years, Indian exports have performed dismally across all markets. One of the key concerns in this regard has been the worsening of ‘farm-to-factory’ production line, which in an agrarian economy like India’s, helps in boosting agri-based exportables........

© DailyO