Prime Minister Narendra Modi on Wednesday took on critics of the government’s handling of the economy, stressing that the first quarter of this year was not the first time that India’s growth had slipped to 5.7%.
Although Mr. Modi indicated that a fiscal stimulus may not be in the offing, he said the government was capable of and committed to take all necessary steps to revive growth and resolve all glitches that have arisen in the first three months of the Goods and Services Tax (GST) regime.
‘Ready to take decisions’
“It is correct that in the last three years after achieving an average growth of 7.5%, this year in April-June quarter GDP growth fell. We don’t deny it. But it is also a fact that the government is committed and capable of reversing this trend. We are ready to take decisions,” Mr. Modi said. “…Under the previous government, in six years there were eight occasions when the growth rate fell 5.7% or lower…There have been quarters when India’s growth rate fell to 0.2%...1.5%,” the Prime Minister said, speaking at an event to mark the golden jubilee of the Institute of Company Secretaries (ICSI) in the capital.
On Manmohan’s watch
Those instances of slow growth were even more dangerous, he said, as it came at a time when India was trying to deal with higher inflation, current account deficit and fiscal deficit.
While stating that he was not an economist, neither did he claim to be one, he said India was at one time a part of ‘Fragile 5’ economies. “Even someone like me, who isn’t an economist, wonders how this happened when a big economist was in charge,” he said, hitting out at the Manmohan Singh government in his speech that stretched over an hour.
Mr. Modi said that some people in the country find happiness in spreading pessimism. “They sleep well at night after that. For such people, a dip in growth for one quarter itself has become the biggest news,” he said, adding that the same persons also claimed that growth was not being felt on the ground when the official statistical machinery pegged growth under the Modi government at 7.4%. The government, he said, was not averse to criticism on economic matters. Concerns over the GST would be addressed while specific measures would be taken to redress the woes of sections such as small and medium enterprises.
Even the central bank had on Wednesday said that growth would rise over time to touch 7.7%, the Prime Minister pointed out. The RBI in its monetary policy review had projected a GDP growth of 6.7% for this financial year, with the last quarter likely to register 7.7% growth.
“Three months after GST, we have got feedback on all its nitty-gritty and issues. And I have asked for the GST Council to review all problems now. I want to assure traders across the country that we are not opposed to change ( Hum Lakeer ke Fakeer nahi hain ). We don’t claim we know everything,” he said.
In the country’s changing economy, honesty would get “a premium”, the Prime Minister said, citing the crackdown on 2.1 lakh suspected shell companies out of 3 lakh firms identified post-demonetisation.
“It was this government that had the courage to take the demonetisation decision. November 8, 2016 will be known in history as the first day in the war against corruption and black money,” Mr. Modi said, adding that after the note ban, the country’s cash to GDP ratio had come down to 9% from 12% before November 8, 2016.
In a bid to point to green shoots appearing in the urban and rural segments of the economy over the past two-three months, Mr. Modi cited various indicators. Commercial vehicle sales had increased 23%, while those of passenger vehicles and two-wheelers were up by 12% and 14%, respectively, since June, he said.