Exporters may cheer and India’s enlarged foreign trade gap may get narrowed in the months to come as Finance Minister P Chidambaram on Thursday promised incentives for overseas commerce next month when the government announces its foreign trade policy.
Although the budget remained silent on the exports boosting measures barring some concessions for leather, gems and jewellery, Chidambaram, addressing a post-budget press conference said, his ministry will support all measures taken to boost shipment of goods and services.
“I look forward to the changes that will be made to the foreign trade policy next month and I assure my support to measures that will be taken to boost exports of goods and services,” Chidambaram said. His concern for raising exports stemmed from an overshooting current account deficit, which has reached a historical high of 5.4 per cent in the July-September quarter.
“Containing CAD is tricky. It can be contained only if we export more, import less or do both. In the short run it is not easy to reduce imports because of our compulsion to import oil, pulses and coal,” he said, adding there was a need to improve exports to reduce the CAD.
He said more measures and decisions will be announced during the passage of the budget in Parliament, raising the hopes of those who were left out in the budget resolution. The finance minister also said the budget was not a one-stop or one-step measure and that it was a continuing process, hinting that when the wheels of the economy turn for the better, the government may announce more measures across the board.
“We must be patient when the economy is challenged and wait for the wheels to turn,” he said, apparently clinging on to the hope that the slowing economy will take a turn for the better sooner than later.
Chidambaram also justified a temporary surcharge on those earning over Rs one crore saying it was necessary to garner some revenues especially when the government has promised to bring down the fiscal deficit to 4.8 per cent of GDP in 2013-14.
"Once tax revenues grow, a year later we don’t need the surcharge. It is like a bridge finance,” he said. He also expressed the hope that the surcharge will not encourage tax evasion.