Sitharaman

exports. This is expected to reduce overall cost of export credit including interest rates, especially to MSMES. While interest cost of dollar-based lending is likely to come down to below 4%, rupee-based borrowing cost will fall below 8%. The move comes at a time when export credit disbursement declined 23% to ₹9.57 trillion a year ago.

“Relaxing external commercial borrowing (ECB) guidelines will improve the liquidity as borrowing will become cheaper,” said KR Sekar, Partner, Deloitte India.

In August, India’s merchandise exports declined for the second time in the current fiscal, while imports fell for the third consecutive month, highlighting the adverse impact of rising protectionism and trade tensions between the United States and China.

The measures are expected to complement the monetary stimulus being given by the Reserve Bank of India (RBI) which has lowered the benchmark interest rate four times since January, bringing the repo rate to 5.4% in August.

Sitharaman said seven nonbank lenders have already benefited from a partial credit guarantee scheme announced in the FY20 Budget for banks to buy pooled assets of non-bank financial companies. A large part of the measures announced by the government in recent weeks has been to address the liquidity crisis among non-bank lenders and small and medium enterprises.

The ongoing economic slowdown has forced the government to consult representatives from various industries including banks, non-bank lenders, foreign investors and manufacturers after the union budget for FY20 was presented. After these meetings, Sitharaman announced measures which included frontloading of public expenditure, a massive ₹100 trillion investment into infrastructure, steps to improve access to credit for businesses, liberal foreign ownership norms and more capital for staterun banks.

India’s economy reported its weakest growth in more than six years at 5% in the June quarter, and slowed for the sixth straight quarter. The central bank has projected the gross domestic product will expand in 2019-20 at 6.9% while most analysts and financial institutions have estimated a growth rate between 6.5% and 7%.

Data showed on Thursday that India’s factory output growth accelerated to 4.3% in July from a downward-revised 1.2% a month ago. Industrial output had grown 6.5% in July 2018.

Industry representatives welcomed the move. “The Finance Minister’s announcements are comprehensive and would give a boost to the economy in the near term…the new scheme to compensate exporters for all duties is going to help considerably. Additional measures such as provision of higher insurance cover, monitoring of export finance and turnaround times at ports and airports will go a long way in improving competitiveness of Indian exporters,” said Chandrajit Banerjee, Director General, Confederation of Indian Industry (CII).

The opposition Congress hit back at the measures, dubbing them “cosmetic “and said the government was “clueless” over the economy which is in shambles. Addressing a press conference, senior Congress leader Anand Sharma said, “India’s economy is in shambles, we are facing a grave situation but the government with its false promises and its outspoken ministers, is not working towards stopping that.”

“Sitharamanji just concluded a press conference. It was disappointing looking at India’s economic situation, it was expected that the government would take steps to resuscitate the economy, increase investments, create j obs, and address i s s ue of exports,” he said.

The experts said IAF had bought new equipment over the last three years but critical capability gaps still needed to be filled. Over several years, the count of IAF’S fighter squadrons has shrunk to 31 compared to a desirable strength of 42, a capability gap the air force is struggling to fill. Parliamentary panels have time and again raised questions about India’s ability to fight the two adversaries at the same time, a worrying scenario that IAF describes as ‘Contingency-iii.’

India defence budget for 2019-20 stands at ~3.18 lakh crore, including a capital outlay of just ~1.04 lakh crore.

India’s defence spending currently stands at around 1.5% of gross domestic product (GDP), the lowest in decades. Experts have argued that India should spend 3% of its GDP to build military capabilities.