'Have A Template': CEA Hints At Page Out Of Covid Playbook To Cushion Tariff Impact On Exporters
"We do have a template from what we did five years ago," the CEA said.
Chief Economic Advisor Anantha Nageswaran, while speaking at the NDTV Profit GST Conclave on Tuesday, said the government is considering a package for exporters hit by US tariffs, that will be along the lines of measures introduced during the Covid-19 pandemic.
The topline will be affected, especially for export-oriented industries, Nageswaran said. Industries will have fixed obligations in terms of interest payments and other commitments, he said, adding that they will require some hand holding with working capital, cash flow management and to find newer markets.
"We do have a template from what we did five years ago," the CEA said. Fortunately this time the impact is not as much as it was the last time, he added.
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On the GST rate rationalisation, Nageswaran said that the thrust to consumption by way of the measures should be seen as a complement to private capex and not a pivot by the government.
The measures will provide a pull to demand and are "well-timed" given the impact from tariffs, he explained. "As such, the GST 2.0 is well timed."
Calling the GST 2.0 "some natural spring cleaning post GST 1.0", the CEA said that the reforms do create some compensation post the imposition of US tariffs, with some exporters finding relief diverting to the domestic market. The measures add to the overall conditions and will definitely be a huge boost, he said.
In the current scenario, a weaker rupee is not entirely an undesirable outcome, the CEA said. Normally a weaker rupee also means higher cost of oil but given the current benign prices and many other industrial commodities reflected in the wholesale prices being in deflation, this is a situation where temporarily, a weaker rupee can help act as a crutch, he said.
Currently, we are looking at a current account that is largely benign with an increase of only 10-20 basis points likely in this fiscal, and maybe closer to 2% depending on many variables and if the current situation persists in the next fiscal, he added.
