SSI reservation main hindrance to export growth : NCAER    

The reservation policy in the small scale sector has caused loss of exports worth $ 60 million, besides arresting employment generation said Dr. Rakesh Mohan, Director General of the National Council of Applied Economic Research (NCAER).    

He was speaking at a seminar on the state of the Indian Economy, organised by the Confederation of Indian Industry and the NCAER in New Delhi. The reservation policy is the primary cause for slow export growth, he said    

Because of this policy, India remains competitive only in low-tech goods, is unable to upgrade technology and competes only on price, Dr. Rakesh Mohan said.    

Rs. 2500 Cr. for SSI credit guarantee plan    

The Finance ministry has fixed a corpus of Rs. 2,500 crore for the fund to operate the credit guarantee scheme for small scale industry (SSI).    

The scheme was announced by Finance Minister Shri Yashwant Sinha in the 1999-2000 budget, and is aimed at improving funds flow to the small sector.    

Sources said the proposed fund would, be operated by SIDBI, which will contribute 20 per cent of the corpus, while the PSU banks would put in the rest.    

The fund will have a governing board which will frame the policy guidelines for it.    

The fund envisages guarantee up to 75 per cent of the Principal amount and the maximum credit to be covered will be Rs. 10 lakh per borrower.    

Besides, borrowers will have to pay a guarantee fee of 2 per cent upfront and service charge of 0.5 per cent per annum of the loan outstanding.