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Export outlook

A. Jacob Sahayam, e-mail

The editorial `Grim export outlook' (Business Line, July 21) has suggested that the Centre and the State governments accord the right mixture of incentives, fiscal and non-fiscal to achieve price competitiveness. It has emphasised the need to cut down tr ansaction costs, which account for more than 22 per cent of the manufacturing cost, and eliminate corruption.

To motivate the States to cultivate exports, it has been suggested that they be given a share of the foreign exchange earnings. At the same time, the sharp fall in industrial production, the squeeze on credit offtake, and the slow growth in the farm sect or have compounded the problem.

At present, the farmer suffers because of the low price for several farm products. And the support price mechanism has to be implemented, which increases the subsidy costs and, in turn, affects the economy. This vicious circle should be broken by policy initiatives and support to reduce input costs, raise productivity and improve the quality of industrial and farm products which could provide remunerative prices and fetch profits at low competitive prices.

This could boost exports and bring prosperity. Wealth produces wealth and adds to progress and prosperity.