According to sources, the commerce ministry has indicated to the RBI that lowering of the rupee export credit rate was necessary for giving a required thrust to the export efforts.

The issue came up for discussion at a meeting between RBI governor Bimal Jalan and commerce ministry officials in the capital recently. The officials have reportedly argued that the euphoria generated by the new Exim Policy would not last unless backed by requisite support from the Reserve Bank.

The RBI, it may be recalled, had earlier lowered the rupee export credit rate to 9 per cent with a promise to increase it to 11 per cent with effect from April 1, 1999. The central bank, on its part, refrained from increasing it to 11 per cent and fixed the rate at 10 per cent for credit upto 180 days and 13 per centbeyond 180 days to 270 days.

However, for exporters, the effective rate for rupee export credit had gone up by 100 basis points. And according to the industry, the cost of finance which has been eroding India's competitiveness to the extent of 3 to 4 per cent would go up further jeopardising the export efforts.

It was further stressed that at a time when the overall interest rates were softening on account of various policy initiatives taken by the RBI, the exporters have been singled out and were subjected to higher rates. At the same time, it was stated that the effect of reduction of interest rate by 1 per cent on dollar credit would be negligible as more than 90 per cent of the exporters draw per and post shipment export credit only in rupee.

Commerce minister R K Hegde, it may be recalled, has openly made know his displeasure about the myopic views taken by the Reserve Bank with regard to interest rates. He wanted the central bank to see reason act accordingly lest the export efforts should suffer.The export growth during 1998-99 was expected to be less than 1 per cent and all round efforts were needed to give a real push to exports.