Finance Secretary Rajiv Kumar and Chief Economic Advisor Krishnamurthy Subramanian conceded to a Parliamentary panel on Finance headed by BJP MP and former Minister of State for Finance Jayant Sinha that the country is going through an “economic slowdown”.
Finance Minister Nirmala Sitharaman so far has avoided the use of word “slowdown”. At a recent conference of International Monetary Fund in Washington, she said that India remains one of the fastest growing economies.
At another instance, during a press conference on September 1, to a direct question on whether the country is going through a slowdown, Ms. Sitharaman said there are some sectors where the “inventory is piling up” and the Finance Ministry is responding to all sectors which come to the government seeking relief.
Mr. Subramanian made a presentation in which he said that all is well with the Indian economy and it is growing at around 5%, which is far better than many other countries. According to multiple sources, the presentation drew sharp questions from MPs belonging to all political shades.
Chairperson of the committee Mr. Sinha, told Mr. Subramanian not to give “simplistic explanations”. The MPs pointed out that it is wrong to blame down turn in global economy entirely because there are patches in global economy which are still doing well.
“They were not willing to accept that there is a crisis in the Indian economy. They were pushed very hard by the committee members. Finally, when they were asked point blank on whether there is a crisis or not, the Finance Secretary Rajiv Kumar and Chief Economic Advisor Mr. Subramanian conceded that yes there is a slowdown,” an opposition MP who was present at the meeting told The Hindu. At least two other committee members from different parties confirmed this.
Other than the Finance Secretary and Chief Economic Advisor, Revenue Secretary Hasmukh Adhia, Disinvestment Secretary Tuhin Kanta Pandey, Expenditure Secretary Ajay Narayan Jha and Niti Ayog CEO Amitabh Kant attended the meeting.
During the day long meeting, in the post lunch session Mr. Kant made a presentation on way ahead to the government's goal to become a five trillion dollar economy by 2025. “Significantly his presentation highlighted the pitfalls that the government faces to reach the target.
While he did not concede that the target is unrealistic what he understood from the presentation is that the government has many miles to go before it reaches anywhere close to the goal,” another opposition MP said.
Mr. Kant said that the Indian agriculture is practically stagnant growing at a rate of one percent and it needs to grow at a rate of four percent for the economy to reach five trillion target.
Finance Ministry officials also acknowledged that the demonetisation has hit the economy and the lag effect of GST. Members from all political parties, including NDA allies and parties sympathetic to the government grilled Finance Ministry officials.
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