The Hindu Business Line : Interest subvention on export credit: CCEA clears additional Rs 500 cr

Under the interest subvention scheme, where the Government steps in by picking up a part of the interest burden, relief is being provided through commercial banks to ease the woes of the exporters on account of unanticipated and steep rupee appreciation against the US dollar this fiscal.

The Cabinet Committee on Economic Affairs (CCEA) on Thursday approved a budget provision of additional Rs 500 crore towards interest subvention so as to ensure that all exporters who benefit from such an initiative are fully covered by adequate provisioning of funds.

Already, the Government had provided for Rs 300 crore towards interest subvention.

“This is an additional Rs 500 crore over and above what has been proposed in the current fiscal. About Rs 300 crore had already been provided.

“Now, we will have Rs 500 crore more, taking the total for the entire 2007-08 fiscal to Rs 800 crore.

“There is no additional subvention now, it is only additional money provided for announcements made already,” an official spokesperson said.

The Department of Financial Services in the Finance Ministry had in early 2007-08 requested the Reserve Bank of India (RBI) to do a quick survey on the requirement of funds for subvention.

The RBI had initially indicated ad-hoc amount of Rs 300 crore for subvention in the current fiscal.

But, with the Centre coming up with a new relief package in November 2007 and extending additional subvention to certain sectors till March 2008, there is now requirement of additional funds and that has been estimated at Rs 500 crore.

The additional Rs 500 crore would be reflected in Budget 2008-09.

Official sources said that this relief has been provided for 2007-08, but the liabilities of this year would spill over to the next financial year.

In November 2007, an additional subvention of two per cent (in addition to the two per cent already offered earlier) in pre-shipment and post-shipment credit was granted to leather and leather manufactures, marine products, handicrafts and all categories of textiles under the existing scheme, including ready-made garments and carpets, but excluding man-made fibres from November 1 to March 31, 2008.

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