“The cost of credit is still too high in India and the MSME sector, which creates a lot of jobs and contributes to exports, is hard pressed for cash,” she told reporters. Repo rate is the rate at which the central bank lends money to commercial banks.
The Reserve Bank of India, which has maintained the key interest rate at 6.5 per cent since April this year citing inflationary concerns, is scheduled to hold its next policy review on October 4. The next policy will be presented by Urjit Patel, who will take charge as governor on September 4.
Sitharaman said that while she will take up the matter with Finance Minister Arun Jaitley, banks also needed to acknowledge the negative effect of high credit costs on MSMEs whose competitiveness is affected.
On the other hand, she said the ongoing interest subvention scheme for exporters by the Commerce Ministry has been helpful in dealing with the impact of global demand slowdown. Saying that the fall in merchandise exports has been arrested, she said a pick-up in growth will have to be seen.
Industry chambers such as the Confederation of Indian Industry have been pressing for interest rate cut to boost manufacturing and economy as a whole.
On the issue of e-retailers advertising significant discounts on products as part of sales for the upcoming festive season, Sitharaman said the companies have claimed they are to blame. Instead, they have argued that registered sellers on their platform are giving discounts.
Following complaints by the Confederation of All India Traders, the Department of Industrial Policy and Promotion (DIPP) has asked online retailers to strictly comply with the e-commerce guidelines that forbid players from directly or indirectly influencing the selling price of goods and services.
On the way forward, she said the e-commerce policy was being looked at to address any discrepancies. She added an online grievance redressal mechanism on complaints against e-tailers will be created under DIPP with representation from the Ministry of Consumer Affairs.
After rising for the first time in 18 months in June, exports shrank again in July, contracting 6.84 per cent, due to a decline in shipments of engineering goods and petroleum products.
The Minister also clarified the foreign investment would not be allowed in the tobacco sector. Also, the country has certain commitments under the World Health Organization under which India has to proactively reduce the quantum of growth of tobacco.
Source: Business Standard