Stimulus can also hurt: Govt

Textiles sector on path of recovery

“Too much of stimulus, when the body is getting healthy, is not good; it can be injurious to health,” Finance Secretary Ashok Chawla said at a seminar on textiles organised by the industry chamber Ficci here.

Referring to current signs of improvement in textile export Chawla said the industry appeared to be recovering with improvement of demand for Indian textile products in major developed countries.

Speaking at a conference on ‘Emerging Global Trends and the Way Forward for the Indian Textile Industry’, organised by FICCI and Ministry of Textiles Chawla said latest data showed a pick up in export of textile items.  He, however, said the government might consider tax incentives for garment machinery and extending the current soft bank lending rates.

Only recently the Commerce Secretary Rahul Khullar had indicated that the Finance Ministry would not be inclined to give more sops to exporters with the export showing upward trend. Country’s export, which posted negative growth rate for 13 consecutive months since October last year in the wake of setting in of global slowdown, posted positive growth rate over 18 per cent in November 2009.

Khullar had indicated that in a bid to bridge the gap in government’s growing expenditure and not-so-fast growing revenue receipts the Finance Ministry would not be inclined to favour continuation of stimulus packages to those sectors of export showing recovery.     

In the face of global slowdown hitting country’s export-oriented sectors like textiles, jewellery and leather the government in 2009 rolled out  sops to these sectors in the form of subsidies on bank loans and duty cuts to prevent job losses.  But in the wake of recovery in domestic demand and output, the country is now witnessing a debate on withdrawing some of the fiscal and monetary stimulus. With the initiation of exercise for preparation of the Budget for 2010-11 apex chambers of trade and industry are lobbying for extension of last year’s stimulus for another six months.