Letter to BS: Govt must look for ways to cut cost of raw material imports

This refers to “Trade deficit widens to $17 billion, exports bounce back” (November 16 ). Progress has been achieved in many areas but export is not picking up steadily and in contrast import is on the rise. The trade deficit thus induced is deleterious to the country’s economic growth. Fuel is a key contributor to this imbalance as we see the number of private vehicles on the road increasing every year. While the use of fuel for certain purposes is essential, the measures to restrict the extravagant use of this essential commodity look ineffective and result in a drain of foreign exchange. The number of the vehicles owned by each family has to be restricted and a nationwide consumer awareness programme educating people to prevent wastage at traffic blocks and elsewhere needs to be introduced. Any policy should encourage judicious use of petroleum products. The extension of the public transport systems to every nook and corner of the country will pave the way for the public to use it which is more affordable compared to the use of personal vehicles. 

The high demand for gold and gold jewellery for converting the financial asset into the highly liquid gold assets also need to be checked. The government should look to introduce an attractive gold bond scheme to desist people from investing in the yellow metal and instead encourage them to invest in the bonds. The bonds must be attractive in terms of returns and liquidity. In order to prevent or restrict the outflow of the foreign exchange due to the import of crude and gold, the government should look for alternate ways to reduce the dollar outflow. Despite the incentives to the export sector, the performance is dismal. The persisting trade war and the diminishing competitiveness of the products are adversely affecting the performance of the sector. Apart from that, the rising input cost and the hurdles in getting back the input tax credit are negatively impacting the competitive pricing of goods. The government must look for speedy ways to reduce the cost of raw material imports. 

VSK Pillai, Kottayam

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