Old wine, new bottle: $7-bn exporter refund old plan with Rs 9,000 cr added

The new program will subsume existing export incentives, for which the government had already penciled in a revenue hit of Rs 41,000 crore in July

India’s new measures announced on Saturday to revive a flagging economy through an aid to exporters isn’t as big a boost as the initial numbers suggested. Finance Minister Nirmala Sitharaman said a new tax refund program for exporters from January 1 will cost the government Rs 50,000 crore ($7 billion) in revenue annually. But it may only amount to an additional Rs 9,000 crore a year in benefits to exporters, a review of budget numbers show.

That’s because the new program will subsume existing export incentives, for which the government had already penciled in a revenue hit of Rs 41,000 crore in July. The overall size of the new scheme will be more or less similar to the existing incentives, which at present is around Rs 40,000-45,000 crore, said Alok Chaturvedi, the director general of foreign trade.

India will separately set up a Rs 10,000 crore funding window for affordable housing to revive stalled projects, Nirmala Sitharaman told reporters in New Delhi on Saturday while unveiling what was her ministry’s third set of measures in four weeks to boost growth.

“It’s better for exports than housing, but not a game changer,” said Teresa John, an economist with Nirmal Bang Equities Pvt. in Mumbai. “There were no significant measures to boost housing demand, and disappointed expectation, and hence may negatively impact real estate stocks.”