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Failure to monitor export proceeds — Panel points finger at administrative machinery

Our Bureau

New Delhi , Feb. 6

THE Public Accounts Committee has indicted the administrative and regulatory machinery of the departments of Commerce and Revenue and the Reserve Bank of India (RBI) for their failure to monitor and ensure realisation of the proceeds from exports of the country, despite operating a string of export promotion and duty neutralisation schemes.

In its report tabled in Parliament on Thursday on non-realisation of foreign exchange, the Committee under the Chairmanship of Mr Sardar Bhuta Singh said that provisions exist under various clauses of the Customs Act and the Central Excise Duties Drawback Rules, which provide for recovery of amount of drawback disbursed to the exporter on the export of goods manufactured in India, wherever export proceeds in respect of such exports have not been realised within the stipulated period. Such provisions notwithstanding, audit review had brought into light the incidence of non-repatriation of export proceeds and consequent non-realisation of foreign exchange aggregating to a whopping Rs 11,735-crore as on end June 2000, two-third of which remained outstanding for more than two years. Citing the Finance Ministry figures of the total amount of export bills outstanding beyond 180 days as on June 30, 2003, comes to a staggering Rs 19,440.79-crore, the Committee said it is "alarmed at such a grim scenario wherein the government's policy to facilitate, promote and sustain growth in the country's exports gets derailed by the inability of the administrative and regulatory machinery to monitor and ensure full realisation of the proceeds from our exports." It has sought a factual position from the Government on this issue stating the current pending position (beyond the stipulated period) of the unrealised export proceeds, stating separately the quantum of proceeds where export spurs have been availed of as also the proportion thereof.

The Committee also asked the RBI to devote attention to aspects of monitoring realisation of foreign exchange/export proceeds in fulfilment of their statutory responsibility. In this regard, the Committee sought a marked improvement in the efficacy of the Export Outstanding Statement (XOS) compiled and monitored by the RBI from their next statement onwards. It urged the Ministry of Finance to assume the responsibility of nodal agency so that the problem of coordination and cooperation between different agencies is ironed out.

Expressing "surprise" over the fact that almost 60 per cent of the duty benefits and 50 per cent of outstanding foreign exchange pertained to only 20 firms, the Committee said this suggests "possibilities of connivance rather than systemic flaws." It urged the Revenue Department to look into this aspect so that revenue offenders do no go scot-free, and said the recoveries of export incentives availed of in respect of unrealised proceeds should be effected in a time bound manner by the agencies concerned.

It also noted that the RBI should play a proactive role in keeping with its remit vis--vis the authorised dealer banks to ensure that write-offs of unrealised forex are permitted scrupulously and only after securing the surrender of export incentives availed of by the defaulting exporters. This should also be suitably incorporated in the proposed online system involving all the organisations. The Committee now expects the RBI to streamline its systems of reporting and control so that extensions of time for realisation of forex are judiciously permitted in the export outstanding statement. The XOS might be amended suitably to be a comprehensive document containing all the relevant particulars.

The Committee also voiced its "disapproval" of the causal approach of the Revenue Department on matters such as export frauds and urged the Government to gear up enforcement machinery in order to ensure that the benefits of export promotion schemes accrue only to the persons for whom these are intended.

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