The Government Saturday announced a fresh set of measures aimed at two flagging sectors of the economy—exports and housing—in a bid to reverse a deepening economic downturn.
The measures announced by Finance Minister Nirmala Sitharaman, include helping affordable housing projects that are stuck for want of last-mile funding but are not categorised as Non Performing Assets (NPAs) and an around Rs 20,000 crore corpus for last-mile funding of these projects. Alongside this, a priority sector tag for export credit has been announced as well as an overhaul of tax refund schemes for exporters was announced to replace an existing scheme (Merchandise Exports from India Scheme), which would cost the exchequer about Rs 50,000 crore per year, roughly the same outgo on the existing scheme.
Industry players and experts are of the view that while the priority sector status to exports will provide some relief to exporters, it is unlikely to have significant impact on Indian export growth, which responds more to global demand.
The package involving last-mile funding for housing projects, which government says could benefit an estimated 3.5 lakh dwelling units, was under consideration during the budget as well. Alongside these announcements to revive India’s exports, Sitharaman also announced an annual “mega shopping festival” in four cities by March 2020.
What is being planned?
The festival is expected to follow the model of Dubai’s annual shopping festival, which is famous for the heavy discounts offered by retailers in the city on popular brands across sectors.
However, India’s own mega shopping festival will have different themes in each of the four cities and is expected to focus on sectors like gems and jewellery, yoga, tourism and textiles and leather. The cities hosting the festival are expected to be finalised by the Commerce ministry.
Who is expected to benefit?
The government plans to give a booster shot to exports of micro, small and medium enterprises (MSMEs) through this festival, which is expected to be a potential showcase of the products that India has to offer in the specified themes. The government expects a “mass onboarding” of artisans across the country as a result.
While exporters are optimistic about the trade prospects of such a shopping festival, some analysts say India will have to ensure it is able to compete with the likes of Dubai, Singapore and Hong Kong if it plans to become the preferred shopping destination of tourists. This can only be done if the festival offers a mix of global and indigenous products, instead of sticking solely to products made in India, they feel. It will also have to ensure that it can compete with the other destinations on the low or no-duty structures they offer on such products.
“If the shopping festival is entirely domestic (in terms of the products offered), it is unlikely that it will be a hit. If you want to make it the destination for South East Asia, you can’t do so when you have Hong Kong, Singapore and Dubai a few hours’ journey away and selling global products. You have to have global products in the mix,” said Devendra Kumar Pant, Chief Economist, India Ratings.
“Dubai is a free port (a region with less strict customs regulations), and if we are looking at competing with it, we will have to compete both on products and duty structures,” he told The Indian Express. At the same time, the festival could generate more employment and sectors like hospitality and transport are expected to benefit as a result of the tourists expected. “There is the tourist inflow and the expenses they will be incurring, whichis going to give some boost to the economy,” Pant said.