A Most Disappointing Budget!

Lot of hype is created describing the recently declared Union Budget as a budget for aam-aadmi. A budget given with an eye on the elections obviously is an effort to play to the gallery. However, as far as textile industry is concerned there is nothing much to cheer about. The so called inclusive growth oft referred by the F.M. could only be a catchy phrase as there is nothing concrete to indicate that the Finance Minister sincerely believes in what he says!

In the central budget for the year 2008-09, only one para that talks about textiles reads as follows -

QUOTE

86. The two principal schemes of the Ministry of Textiles - the Scheme for Integrated Textile Parks (SITP) and the Technology Upgradation fund (TUF) - will be continued in the Eleventh Plan period. All 30 integrated textile parks have been approved and 20 units in four parks have commenced production. I propose to maintain the provision for SITP at Rs.450 crore in 2008-09. The provision for TUF will be increased from Rs.911 crore in the current year to Rs.1090 crore in 2008-09.

However, before this happens a substantial effort will have to go into improving the quality of craftsmanship and also the loom capabilities.

UNQUOTE

In this context, let us understand why the current Union Budget has failed to cheer up the textile sector. The demand from this sector was to provide effective measures to answer the disadvantage created because of the Rupee becoming stronger in comparison with the US Dollar. With appreciation of our currency to the extent around 8 - 9% our exports are facing a disadvantage. Textile, where bulk of the exports, come from the cotton sector has a problem because of low value addition and therefore the situation for their survival becoming increasingly difficult. There is no effort by the Union Finance Minister to provide any relief to our exporters from the textile sectors who are finding it difficult to stand in competition with specific reference to China. Unless this sector as a whole remains buoyant there is no reason to believe that the money being pumped in via TUFS route will provide an effective doze boosting the performance of this sector.

The steep and fast appreciation of the Rupee against the US Dollar has hit the Indian textile and garment industry considerably. In the present era of globalization, no country can operate in isolation and still continue to prosper. The Rupee appreciation is hitting at the foundation shaking the minarets. This is very true especially when we are competing fiercely with China. It should also be understood that ambitious targets are set for our exports in general and textile exports in particular. If the total turn over of the textile sector is to touch the projected 150 billion US Dollar by 2015, then a substantial chunk of that exceeding around 80 billion Dollars will have to come from exports. This would mean the current exports of textiles must grow almost four-fold in next seven years. The current budget does not seem to be supporting this long-term objective as the Finance Minister has preferred to ignore the plea of the exporters in toto by not offering a single measure to even remedying the situation partly. It must therefore come as a big disappointment to this sector.

Much was expected from Mr. Chidambaram. The issue of Rupee appreciation is not bothering the textile sector only. It was therefore expected that while the Finance Minister addresses this important issue in the overall context obviously the demand of the textile sector will be taken care of. Unfortunately this has not happened.

It is with this background, TEXTILE REVIEW feels that there is nothing for the textile sector in the current budget to cheer up. May be in the number game the Finance Minister thinks that the textile sector is not that important for the coming elections as may be the social sector. The central budget 2008-09 would go down as one of the most disappointing budgets for the textile sector.