At best, the sops will mitigate the plight of exporters; reversing the export decline of the first quarter remains a distant dream. The concessional interest on export credit (for eight months) will make the lot of manufacturer-exporters a trifle less unbearable; but the point will not be missed that the Reserve Bank's offer of even cheaper credit for incremental exports has found few takers. Hegde's announcement of an extension of the tax holiday for EOU-EPZ units seems fine.

However, since 70 per cent of their output is exported, and are, therefore, free of tax, the extended holiday will, in effect, cover 30 per cent sales in the domestic tariff area. The package announces with great flourish that the government will pay interest if duty drawback or refund of terminal excise dues are delayed by two months. But why does theexporter have to wait for drawback and refund? Claims are filed only after export receipts have been certified by a bank: this may take up to three months.

Thereafter, a two-month wait is tantamount to penalising exporters.

The substitution of bank guarantees - which ensure prompt payment against defaults - by legal undertakings, if accepted by the bureaucracy, is bound to attract conditionalities which will make legal undertakings the exception and bank guarantees the rule. Another perfunctory element of the package is the subcontracting facility in the domestic tariff area promised to EOUs; this leaves open the key issue of leakage of duty-free imports (for exports) into the domestic tariff area. How will the problem of over-invoicing/ under-invoicing be tackled under self-certification? Thus, the procedural reforms of the package leave too many loose ends untied. This raises doubts about their effective implementation.

Hegde has not addressed the problem of where the export strategy has gone wrong.This requires an examination of relative profits in the domestic and export markets: though difficult, this should be an on-going task. Hegde should have made a beginning, and not stopped with sops. How has the currency meltdown in East Asia changed the competitiveness of India's exports (of electronics hardware, for example)? The question needs to be urgently tackled. East Asia will cast its shadow on India's exports for long. The focus of those in political authority is, however, on appeasing pressure groups.