Reserve Bank of India Forms Diamond Task Force
February 15, 09India’s Reserve Bank (RBI) is examining the problems facing the country’s diamond industry. A task force it formed will examine the issues the local industry faces and make specific recommendations on how to resolve these issues, The Hindu Business Line reported on Thursday.
RBI’s Central Board appointed to the task force representatives of the Gujarat State Government, State Level Bankers’ Committee Convener (SLBC) for Gujarat (Dena Bank) and other bankers. It expects quick answers, setting a tight deadline - the task force needs to submit its report by February 28.
India’s diamond trade was hard hit by the global economic collapse, exasperated by structural problems in the local industry that surfaced following the crisis. Among those problems are problematic exports, heavy dependency on bank financing that allows extended credit to buyers, and fleeing money - industry financing that was funneled to real estate purchases and stock market investments instead of being re-invested in the industry.
As a result of Gujarat’s diamond woes, many thousands of workers lost their jobs, taking with them valuable manufacturing know how. The personal plight of some of these workers led to a number of suicides in recent months.
A request for government help by local diamond manufacturers was met with an angry response that alleged that manufacturers spent their riches without preparing for a rainy day.