TEXT :
MR. SPEAKER: The House will now take up the Export-Import Bank of India
(Amendment) Bill, 1998. Shri Kadambur M.R. Janarthanan.
THE MINISTER OF STATE IN THE MINISTRY OF PERSONNEL, PUBLIC GRIEVANCES AND PENSIONS AND MINISTER OF STATE IN THE MINISTRY OF FINANCE (BANKING, REVENUE AND INSURANCE) (SHRI KADAMBUR M.R. JANARTHANAN): Sir, I beg to move:*
That the Bill further to amend the Export-Import Bank of India Act, 1981, be taken into consideration."
The Export Import Bank of India (EXIM Bank), as the hon. Members are aware, is a specialised financial institution constituted under the Export Import Bank of India Act, 1981. It is wholly owned by the Government of India. The charter of the Exim Bank stipulates that it shall provide financial assistance to exporters and importers, and function as the principal financial institution for coordinating the working of institutions engaged in financing export and import of goods and services with a view to promoting the country's international trade and for matters connected therewith or incidental thereto.
The Exim Bank has been assigned a special role in providing medium and long term export credit to exporters, that is to say, project exporters as well as exporters of capital goods and other manufactured goods on deferred payment terms; providing lines of credit to banks, and foreign government agencies to finance imports of eligible goods and services from the country; providing term loans to export-oriented units in the country and equity finance to Indian companies setting up joint ventures/wholly owned subsidiaries abroad; and providing information and advisory services to Indian exporters.
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* Moved with the recommendation of the President.
The Exim Bank's performance over the ten years (1988-98) has been satisfactory. During this period, its loan assets have grown at an annual average of 19 per cent with cumulative sanctions at Rs.14,893 crDore. In 1997-98, sanctions and disbursements amounted to Rs.1840 crore and Rs.1370 crore respectively. The Bank's operations have been profitable since the first year of its establishment and it has also been paying dividend to the Government every year.
The authorised capital of the Exim Bank is Rs.500 crore. The paid-up capital of the Exim Bank has been augmented every year out of budgetary allocation. In the year 1995-96, an amount of Rs.59.66 crore was released to Exim Bank increasing the paid-up capital to Rs.500 crore approximately. In order to provide the Exim Bank an adequate capital base to support its future business growth, maintain its creditworthiness with international lenders, to enable it to raise external commercial borrowings at competitive rates and to retain adequate resource flows to enable the Exim Bank to maintain its flexibility, the Exim Bank's authorised capital is proposed to be raised from Rs.500 crore to Rs.1000 crore provided that the Central Government may, by notification, increase the said capital to Rs.2000 crore.
Sir, I now commend this Bill to this House for consideration and passing.
MR. SPEAKER: Motion moved:
"That the Bill further to amend the Export-Import Bank of India Act, 1981, be taken into consideration."
This quantum of Rs.200 crore was fixed in the year 1981. You try to compare the rates prevalent in those days for different commodities which we were exporting and try to compare the prevailing rates of today in the market. So, Sir, according to me, this amount of Rs.1000 crore is not sufficient. It requires further enhancement. The Government of India may enhance, by even up to Rs.2000 crore and beyond Rs.2000, whenever they feel necessary they may do so by notification.
Sir, not only this, Export-Import Bank credit amount is to be increased. In this country, an atmosphere must be created for stepping up exports. In the recent past, we have seen the attitude of this Government headed by Shri Vajpayee. They have enhanced the list of commodities to be imported by 294 which are also manufactured in this country. I do not know why they have permitted such a large number of very petty items like bindis also to be imported from other countries. I think the Government of India may have a fresh look into the list of recently permitted items to be imported. Now primarily we are exporting our agricultural products to certain other countries. For instance, from India we are trying to export chillies to certain countries where there is a need. China has become the biggest competitor for us in the international market. Quality-wise, chillies in China is better than our chillies. This is the first point. Secondly, the rate they are offering is also comparatively lower to our rates. So, primarily we have to educate the growers of our country to improve their quality of production, to reduce the cost of production, and to stand in competition with other countries as far as exports are concerned. The future of this country depends mainly on stepping up of our exports. The list of commodities that are to be exported is to be enlarged. Quality-wise also we have to take a lot of steps to educate the people.
For instance, some of the industrial manufacturing units are also engaged themselves in the export markets. Again, there also, the standard is to be improved. Unless we improve the standard and quality of the manufacturers of engineering products garments and certain other products, we will not be able to step up our exports. Therefore, I would request this Government to take necessary steps to educate our agricultural community to maintain quality, to reduce the cost of production, and to think of more and more exports. Similarly, the Government should create an atmosphere for the manufacturing units also to step up their exports.
In 1981, the authorised capital of Export-Import Bank of India was only Rs.200 crore.
With liberalisation, privatisation and with the Government's policy of allowing the foreign companies to invest in India, this authorised capital, which was very less, was increased to Rs.500 crore. At present, the Government wants to increase this authorised capital upto Rs.1,000 crore.
Sir, as we all know, more and more foreign companies are coming into India and they want to invest money here. Foreign trade is increasing in various countries, especially after the signing of the WTO Agreement and to encourage our exporters, it was felt by the Export-Import Bank to increase this authorised capital and now it has been decided to increase it to Rs.1,000 crore. As the hon. Member has said, there is, of course, a provision to increase the authorised capital upto Rs.2,000 crore. But for the moment, I think, the Government thinks that Rs.1,000 crore is enough and that is the reason why it wants to increase the authorised capital from Rs.500 crore to Rs.1,000 crore.
Sir, our foreign exchange reserves have increased from 27,034 billion dollars to 29,000 billion dollars in the month of June. But we will have to be very careful, especially because the slowing down of the economy is a big concern for the people. There is, at the moment, a recession in India. Of course, it is a phenomenon which is there in foreign countries too. So, it is a global recession. The fall of the currencies of the East Asian countries has also brought in this situation. We have to take steps to see that the recession in the economy is somehow overcome.
Sir, it is found that over Rs.60,000 crore of surplus money is available in the banks which can be lent out. But because of the recession, maybe the banks do not have the confidence. They are looking around for big companies and blue-chip companies. But unfortunately, due to the recession, other industries are looking around for money and this is a very big problem. The medium level industries are looking for working capital.
Some time back, we did have a meeting of the Standing Committee and it was pointed out to the officials of the Reserve Bank of India that the banks will have to be lenient and I had even suggested that if some kind of cheaper loans could be given to the industries, it would be better. Due to the recession, the industries are not able to repay their debts, especially to the financial institutions and banks and it was suggested that on a case-to-case basis the banks could consider a moratorium on the instalments of repayment, it would solve the problem to some extent. This kind of a suggestion was given by the Standing Committee. I would request the hon. Minister to please get this suggestion examined. I do not suggest it as a general policy, but he may consider this suggestion on a case-to-case basis for industries, especially in the core sector, which is not doing well. It is facing a lot of problems now. At the moment, if some kind of an encouragement is given to it like a moratorium on repayment to industries like steel, cement, solvents etc., I think, it will help the industries, because most of them are not able to repay the bank loans and also they are not able to repay their instalments to the financial institutions.
Sir, on the positive side, we have got NRI deposits of about 20,402 million dollars.
We must encourage because of the gap and because of the problems faced by the industry at home. We will have to encourage the NRIs. We will have to create a cordial industrial atmosphere.
There is an urgent need to increase the investment infrastructure. The hon. Prime Minister has declared some time back that a national highway - a freeway - will be constructed. And work for constructing about 7,000 kms will start soon. I am sure that this kind of investment in infrastructure in India, in the core industries, especially steel and cement industries - will get a big boost. That will indirectly boost up the economy of this country.
I would like to mention one point here about import of sugar. We have been discussing this. I wrote to the Prime Minister. I did get a reply. Now, sugar is being imported from Pakistan. I believe, the contract has been for about 16 lakh tonnes out of which nine lakh tonnes have already come into India. Because of this, the Government has lost on import duty because the import duty, at the moment, is only five per cent. Secondly, because of the import, the price of sugar has come down. It is going to result into big problems for the sugar industry.
My concern is for the poor farmers. In case the sugar industries face problems, they will not be able to make payment to the farmers who are going to supply sugarcane this year. The season has already started. Especially in Uttar Pradesh, the rates of sugarcane have not been declared as yet. So, my request is that the import duty on sugar which is being imported especially from Pakistan, should, at least, be 15 per cent so that it can match the rates which are prevalent in India.
The Government will have to take steps especially in the industrial sector. Because of this recession and unemployment, some of the industries are closing down. Some of the industries are incurring losses. Even the big companies, which are there, have incurred losses in the first six months of this year. The Government will have to take urgent steps.
With this, I congratulate the hon. Minister for increasing the authorised capital from Rs. 500 crore to Rs. 1,000 crore. I am sure, this increase in the authorised capital will give a boost to the exporters because the exports have also come down. Of course, because of the global recession, the exports have come down. But if we give cheaper credit to the exporters, I am sure, the exporters will be able to increase their exports and bring in the much-awaited and expensive foreign exchange. With these words, I conclude.
OGL