Union Cabinet Allocates Rs 2,500 Crore for Extended Interest Equalization Scheme
The Union Cabinet’s recent decision to allocate Rs 2,500 crore for the Extended Interest Equalization Scheme aims to provide a substantial boost to the Indian export sector. This strategic move is envisioned to enhance India’s export competitiveness globally. With the ongoing efforts to bolster the nation’s export ecosystem, this financial allocation signals a crucial step toward promoting economic growth and global trade relations.
The Extended Interest Equalization Scheme holds paramount significance in uplifting various sectors of the economy. It primarily targets specific export sectors, such as micro, small, and medium enterprises (MSMEs), providing them with vital financial support. By offering interest equalization rates to these sectors, the scheme aids in making their products more competitive in the international market.
Why this News is Important
Boosting Export Competitiveness
The allocation of Rs 2,500 crore for the Extended Interest Equalization Scheme is pivotal as it aims to enhance India’s export competitiveness globally. This move holds the potential to uplift various sectors, especially MSMEs, by providing essential financial support.
Supporting ‘Make in India’ Initiative
This decision reaffirms the government’s commitment to the ‘Make in India’ initiative by facilitating the growth of the export sector. The infusion of funds into the scheme is expected to alleviate financial burdens on exporters, enabling them to explore newer markets and enhance product quality.
Mitigating Global Economic Challenges
Amidst the pandemic-induced economic challenges, this allocation becomes instrumental in supporting export-oriented businesses. Reducing the cost of credit for exporters strengthens their competitiveness and helps in sustaining and expanding their market share internationally.
Historical Context
The Interest Equalization Scheme was initially introduced in April 2015 to provide interest equalization of 3% to eligible exporters. It aimed to enhance export credit availability, especially to sectors with high employment potential, such as textiles and leather.
The scheme has been instrumental in supporting export-driven sectors and has undergone several modifications since its inception. The recent decision to allocate Rs 2,500 crore signifies the government’s continuous efforts to revitalize the export ecosystem, particularly amidst the challenges posed by the global pandemic.
Key Takeaways from “Union Cabinet Allocates Rs 2,500 Crore for Extended Interest Equalization Scheme”
| Serial Number | Key Takeaway |
|---|---|
| 1. | Rs 2,500 crore allocated for the Extended Interest Equalization Scheme to boost export competitiveness. |
| 2. | Focus primarily on aiding micro, small, and medium enterprises (MSMEs) in the export sector. |
| 3. | Reinforcement of the ‘Make in India’ initiative by facilitating growth and market expansion for exporters. |
| 4. | Mitigation of economic challenges by reducing credit costs for exporters amidst the global pandemic. |
| 5. | Historical context: Scheme introduced in 2015; ongoing modifications demonstrate commitment to revitalizing export sectors. |
Important FAQs for Students from this News
What is the Extended Interest Equalization Scheme?
The Extended Interest Equalization Scheme is a government initiative aimed at providing interest equalization rates to specific export sectors, especially micro, small, and medium enterprises (MSMEs), to enhance their competitiveness in the global market.
How does the allocation of Rs 2,500 crore benefit the export sector?
The allocation of Rs 2,500 crore for the Extended Interest Equalization Scheme helps in reducing the cost of credit for exporters, thereby enabling them to explore new markets, improve product quality, and expand their operations.
What is the significance of the ‘Make in India’ initiative in relation to this allocation?
This allocation reaffirms the government’s commitment to the ‘Make in India’ initiative by providing financial support to boost the export sector, aligning with the objective of promoting indigenous manufacturing and enhancing global competitiveness.
Has the Interest Equalization Scheme undergone any modifications since its inception?
Yes, the Interest Equalization Scheme has been subject to modifications since its introduction in 2015. The recent allocation of Rs 2,500 crore reflects the government’s ongoing efforts to revitalize and strengthen the export ecosystem.
How does this allocation address the challenges posed by the global economic scenario, especially amidst the pandemic?
Amidst the economic challenges triggered by the pandemic, the allocation of funds for the Extended Interest Equalization Scheme aims to support export-oriented businesses by reducing credit costs, thereby enhancing their resilience and competitiveness in the global market.
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