Parliamentary panel bemoans reduced budgets for commerce department, DPIIT

A parliamentary panel has bemoaned the reduced budgetary allocation by a third to the department of commerce for fiscal year 2020-21.

In a report tabled in Parliament on Wednesday, the parliamentary standing committee on commerce said this trimming of funds would hurt trade promotion and export augmentation.

The shortfall in the overall budgetary allocation to commerce department in BE 2020-21 is of Rs 3019.19 crore to the proposed outlay of Rs 9238.51 crore. The committee said “revival of already subdued trend in export will need stimulation which would require additional funds.”

In another report tabled Monday, the committee expressed its “concern over the massive shortfall” in budget allocation to the Department for Promotion of Industry and Internal Trade (DPIIT) “at a time when the industrial sector is in doldrums”. The DPIIT has an allocation of Rs 6605.55 crore in BE 2020-21 against its projected demand of Rs 16767.40 crore.

The 31-member committee, headed by YSR Congress Party’s V Vijayasai Reddy, said this reduced allocation “will have a severe repercussion on the optimal functioning of crucial schemes/programmes and their outcomes.”

On India’s declining exports, the committee asked the Centre to reduce "overdependence" on developed countries, especially the US and European Union, for exports and suggested it explored markets in Africa, West Asia and South America.

It “recommended the government to be vigilant in checking fluctuations in exchange rate of rupee and unfair trade practices adopted by the trading partners.”

In its representation to the committee, industry body Assocham suggested the Centre take “immediate steps” to release Chinese import consignments required by MSMEs which are held up at high seas for quarantining coronavirus contamination.

Assocham also suggested subsidies and manufacturing licenses to Indian pharmaceuticals to manufacture active pharmaceutical ingredients in the country which are presently imported from China.

The committee expressed concern at the discriminatory measures, such as delisting India from ‘Developing Beneficiary Country’ under the ‘Generalised System of Preferences (GSP)’, inclusion of India in ‘Priority Watch List’ by United States Trade Representative (USTR) and increase in disputes against India in the WTO. It urged the department to undertake a comprehensive analysis of trade remedial measures.

The committee said the ‘price stabilization fund’ scheme for providing financial relief to small growers of tea, coffee, rubber and tobacco has discontinued since 2013. However, the new scheme of ‘revenue insurance scheme for plantation crops’ has not been implemented.

It recommended “to launch a new crop insurance scheme at the earliest to provide security to the plantation growers in terms of price stabilization and crop protection”.

The report expressed “deep concern” on the substantial reduction of the budgetary allocation made to Agricultural and Processed Food Products Export Development Authority (APEDA), Marine Products Export Development Authority (MPEDA), Tea Board, Coffee Board, Rubber Board and Spices Board from the proposed outlay under the Medium Term Expenditure Framework.

The committee said allocation of funds provided under various schemes for boosting trade from the northeastern region of India is considerably low.

The committee took note of the declining sectoral growth rate of Index of Industrial Production (IIP) comprising three sectors, namely, mining, manufacturing and electricity with mining registering a negative growth rate during April-October 2019-20.

The committee asked the department to finalise the new industrial policy at the earliest in tune with changing global scenario.

It expressed its concern on the declining FDI inflow in manufacturing sector and also disparity in FDI inflows among the states, and also over the delay in payment by PSUs and government departments to startups.

It expressed its displeasure at the slow pace of development of five industrial corridors – Delhi-Mumbai, Chennai-Bengaluru, Amritsar-Kolkata, Vizag-Chennai and Bengaluru-Mumbai.

The parliamentary committee expressed its concern at the contraction of exports in 2019-20. It noted volatility in export growth in key sectors such as engineering goods, petroleum products, gems and jewellery, cotton yarn/fabrics and leather.

The committee appreciated the Centre for setting up a monitoring committee to address key issues related to Free Trade Agreements (FTAs).