Effect of Monetary Policy on Indian Economy Post Reform Period
EXPORT CREDIT
Export credit policy refers to the measures influencing the level and composition of exports of a country. India‘s export policy has been primarily that of promoting exports. One of the important measures being adopted for export promotion in India is concessionary export credit.
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Some of the policy measures related with export credit are given below: 1992-93
i) In order to make dollar-dominated export credit scheme more attractive, the rate of interest on refinance under this scheme was reduced from 7.5 per cent to 5.5 per cent per annum with effect from April 22, 1992. ii) In order to facilitate an environment for promotion of exports, effective October 9,1992, interest rates on export credit (rupee) provided by banks were reduced by one percentage point across the board. Thus, the basic lending rate on export credit was reduced from 15 per cent to 14 per cent per annum. iii) Effective March 1, 1993, the interest rates on export credit (rupee) provided by banks were again reduced by one percentage point across- the- board. Thus, the basic lending rate on export credit was reduced to 13 per annum.
1993-94
i) With a view to ease the burden on the export sector, the Union Budget 1993-94 exempted payment of interest tax on export credit by banks from April 1, 1993 thereby reducing the effective interest rate on export credit by about one-half of one percentage points. ii) Following reduction in the MLR for advances of above Rs.2 lack by one percentage point to 16 per cent effective from June 24, 1993, the interest rates in respect of usance bills for periods beyond 90 days and up to six months and beyond six months were reduced from 17 per cent to 16 per cent and from 22 per cent to 21 per cent, respectively.
1994-95
There were no new policy measures during 1994-95.
253
1995-96
i) Considering the increase in the US dollar LIBOR rate, the interest rate on post- shipment credit denominated in US dollars (PSCFC) was increased from 6.5 per
Export credit policy refers to the measures influencing the level and composition of exports of a country. India‘s export policy has been primarily that of promoting exports. One of the important measures being adopted for export promotion in India is concessionary export credit.
252
Some of the policy measures related with export credit are given below: 1992-93
i) In order to make dollar-dominated export credit scheme more attractive, the rate of interest on refinance under this scheme was reduced from 7.5 per cent to 5.5 per cent per annum with effect from April 22, 1992. ii) In order to facilitate an environment for promotion of exports, effective October 9,1992, interest rates on export credit (rupee) provided by banks were reduced by one percentage point across the board. Thus, the basic lending rate on export credit was reduced from 15 per cent to 14 per cent per annum. iii) Effective March 1, 1993, the interest rates on export credit (rupee) provided by banks were again reduced by one percentage point across- the- board. Thus, the basic lending rate on export credit was reduced to 13 per annum.
1993-94
i) With a view to ease the burden on the export sector, the Union Budget 1993-94 exempted payment of interest tax on export credit by banks from April 1, 1993 thereby reducing the effective interest rate on export credit by about one-half of one percentage points. ii) Following reduction in the MLR for advances of above Rs.2 lack by one percentage point to 16 per cent effective from June 24, 1993, the interest rates in respect of usance bills for periods beyond 90 days and up to six months and beyond six months were reduced from 17 per cent to 16 per cent and from 22 per cent to 21 per cent, respectively.
1994-95
There were no new policy measures during 1994-95.
253
1995-96
i) Considering the increase in the US dollar LIBOR rate, the interest rate on post- shipment credit denominated in US dollars (PSCFC) was increased from 6.5 per