Govt, RBI should take more steps to revive economy

Context: Various steps taken by the government and RBI to drain the effect of the pandemic in export sector, has helped revive the economy, still more steps are needed.

Steps taken:

• Non-fiscal measures by Centre: including an extension of interest equalization scheme, granting more time to fulfill export obligations, relaxation in SEZs, giving effect to a retrospective provision in Finance Act 2020 regarding transition credit.
• RBI’s actions: Extended the period of pre and post-shipment export credits and increasing the time limit for import payments and also extended credit to EXIM bank.

Transforming Export Sector:

• Recent steps taken will help in the medium and long term, they are inadequate in tackling demand and supply disruptions. 

• Additional concessions in MEIS Scheme and export package for canceled deals must be provided.

• Address liquidity challenges: a roll-over of forwarding cover without interest and penalty should be introduced.
• Creating an export development fund: for the marketing of Brand India products.

Conclusion:

• Given the uncertainty, more steps to cope up with evolving situations may be forthcoming by RBI and the Centre. All stakeholder has to absorb losses and not expect the government to take the hit alone.