Mr A Sakthivel, President, Federation of Indian Export Organisation (FIEO) while commenting on the recently released data of RBI on the credit offtake stated that while the offtake is about 50% of what it was in the last fiscal (13.7% y-o-y as against 24% in 2008-2009), it is encouraging that it has moved on from the single digit levels.

FIEO Chief stated that keeping in view the fact that Index of Industrial Production (IIP) has shown a growth of 11.2% (as per data released on 10th January, 2010) and the consumer goods production, a whopping 36% growth, the timing and sequencing of exit from the expansionary fiscal and monetary policy is an issue which may be given due consideration while announcing the 3rd quarter review of the Monetary Policy on 29th January, 2010.He elaborated that much of the data announced is driven by domestic demand and the sustainability of the same can only be tested with time.

President FIEO concluded that it would only be right under the current scheme of things to not only continue with interest subvention but to include all sectors and factor in the element of transaction cost , at least partially, which is as high as 18% for some sectors. Foreign currency loans (PCFC and Post-shipment) at 6%; term loans at single digit rates of interest; investment linked tax deduction for plant & machinery, R&D besides marketing incentives for tapping new markets etc. might enable MSMEs to work on a level playing field with other MSMEs around the world.

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