New Delhi: The Union Cabinet on Wednesday has undertaken a series of measures to provide a boost to the exports sector.
The Government has approved a capital infusion of Rs 4,400 crore in the state-owned Export Credit Guarantee Corporation (ECGC) and its listing through an initial public offering.
The government will inject Rs 4,400 crore in the ECGC over a period of five years beginning 2021-22, said the committee in a press release.
ECGC was established by the Government of India under the Companies Act in 1957 to promote exports by providing credit insurance services to exporters against non-payment risks by the overseas buyers due to commercial and political reasons. It also provides insurance covers to banks against risks in export credit lending to the exporter borrowers. ECGC endeavours to support the Indian export industry with its experience, expertise and an underlying commitment to progress and advance of India’s exports., the statement said.
ECGC plays a wider role in supporting exports from labour-intensive sectors and encourage bank lending to enterprises of small exporters thereby leading to their revival. Capital infusion in ECGC will enable it to expand its coverage to export-oriented industry particularly labour-intensive sectors. The approved amount will be infused in instalments thereby increasing the capacity to underwrite risks up to ₹88,000 crores and this will enable ECGC to issue covers that can support additional exports of ₹5.28 lakh crore over the five-year period in line with the existing pattern.
In addition, in terms of the report ‘Export to Jobs’ published by the World Bank and International Labour Organisation in February 2019, ₹5.28 lakh crore exports will lead to formalization of 2.6 lakh workers. Further, the total number of workers (both formal and informal) will increase by 59 lakhs as per the report.
The Cabinet also approved the continuation of the National Export Insurance Account (NEIA) scheme and infusion of Rs 1,650 crore Grant-in-Aid over five years. Capital infusion in NEIA will help tap the huge potential of project exports in the focus market.
NEIA Trust was established in 2006 to promote project exports from India that are of strategic and national importance. The NEIA Trust promotes Medium and Long Term (MLT) /project exports by extending (partial/full) support to covers issued by ECGC (ECGC Ltd, formerly known as Export Credit Guarantee Corporation of India Ltd.) to MLT/project export and to Exim Bank for Buyer’s Credit (BC-NEIA) tied to project exports from India.
The capital infusion in NEIA Trust will help the Indian Project Exporters (IPE) to tap the huge potential of project exports in the focus market. Support to project exports with Indian content sourced from across the country will enhance the manufacturing in India. Corpus contribution of ₹1,650 Crore will enhance the underwriting capacity of the Trust and will enable NEIA to support project exports worth ₹33,000 Crore at full capacity utilization that in turn will translate into an estimated output of domestically manufactured goods to the tune of ₹25,000 Crore approximately.
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In addition, assuming an average of 75% Indian content in the projects, in terms of the report ‘Export to Jobs’ by World Bank and International Labour Organisation, it is estimated that around 12000 workers will move into the formal sector. Further, the total workers (the number of both formal and informal) will increase by 2.6 lakh in the relevant sectors as per estimates based on the report.
The Cabinet Committee on Economic Affairs chaired by the Prime Minister, Narendra Modi has given approval for listing of M/s. Export Credit Guarantee Corporation Ltd. (ECGC), an unlisted CPSE through the Initial Public Offer (IPO) on the Stock Exchange under the SEBI's (Issue of Capital and Disclosure Requirements) Regulations, 2018.
ECGC Limited is a wholly-owned CPSE of the Government of India set up with the objective of improving the competitiveness of the exports by providing Credit Risk Insurance and related services for exports. The Company intends to increase its maximum liabilities (ML) to Rs 2.03 lakh crore from Rs 1.00 lakh crore by 2025-26.
The proposed listing of ECGC Limited would unlock the true value of the company, promote 'people's ownership' by encouraging public participation in the equity holding of the company and also promote Corporate Governance through transparency and greater accountability.
A listing may enable ECGC to mobilize fresh capital from the market either through the same IPO or subsequently through a Follow-on Public Offer (FPO) and thereby help in increasing the Maximum Liability cover for it.
The disinvestment proceeds will be used for financing of social sector schemes.
The Cabinet Committee on Economic Affairs (CCEA), has also approved the continuation of ‘National Scheme for PM POSHAN in Schools’ for the five year period 2021-22 to 2025-26 with the financial outlay of ₹ 54061.73 crores from the Central Government and ₹ 31,733.17 crores from State Governments & UT administrations. Central Government will also bear the additional cost of about ₹ 45,000 crores on foodgrains. Therefore, the total scheme budget will amount to ₹ 1,30,794.90 crore.
The CCEA cleared the PM POSHAN Scheme for providing one hot cooked meal in government and aided schools from 2021-22 to 2025-26. This is a Centrally-Sponsored Scheme which covers all school children studying in Classes I-VIII of Government, Government-Aided Schools. The earlier name of the scheme was ‘National Scheme for Mid Day Meal in Schools’ popularly known as Mid Day Meal Scheme.
The scheme covers about 11.80 crore children studying in 11.20 lakh schools across the country. During 2020-21, the Government of India invested more than ₹ 24,400 crores in the scheme, including a cost of about ₹ 11,500 crores on foodgrains.
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