Finance Minister Nirmala Sitharaman told the Rajya Sabha on Wednesday that though economic growth had slowed, the economy was not in a recession yet and may not ever be. The government, she said, was aware of the situation and had taken sector-specific decisions to alleviate the distress.
“If you look at the economy with a discerning eye, you see that growth may have come down... but it is not a recession yet and won’t be a recession ever,” Ms Sitharaman said while giving her reply during the short duration discussion on the economic slowdown.
The Congress, Trinamool Congress and Left MPs walked out while Ms. Sitharaman was speaking, saying she was repeating what she had said in her Budget speech in July, rather than answering questions raised by MPs during the discussion.
The Minister said while she had patiently heard 23 MPs speak during the discussion, the Opposition MPs would not hear her reply.
She went on to cite statistics to show that almost all key macroeconomic indicators, such as headline inflation, core inflation, food inflation, foreign direct investment, foreign exchange reserves, and the government’s liability ratios were in a better position at the end of NDA-I’s term as compared to the end of UPA-II’s term.
Ms Sitharaman said GDP growth accelerated from 7.4% in 2014-15 to 8% in 2015-16 and 8.2% in 2016-17. It was only at this point that the delayed impact of the ‘twin balance sheet problem’ of stressed balance sheets of corporates and banks began to show itself and, as a result, investments also began to slow.
“Even for the first quarter of 2019-20, clearly the decline is very pronounced, and we are aware of it,” she said. “But it has not come out of nowhere, there is a trail.”
On the Goods and Services Tax, the Finance Minister said various rate cuts implemented by the GST Council were to benefit consumers and to spur manufacturing growth.
“To help consumers and to induce growth in manufacturing, the government consciously recommended decrease in GST rates for 90% of the items from 28% to 12% or 18%, and that helps the consumers,” Ms Sitharaman said. “The rate has been decreased for about 400 goods and 77 categories.”
Further, against the target of ₹6.63 lakh crore net GST collection this year, the government had collected ₹3.23 lah crore by October, which was 49% of the target.
“In spite of the reduction in average gross collection in September and October, the figures are higher than the corresponding figures in the previous year,” Ms. Sitharaman said. “GST is not doing badly. It can do better. For that, innovative steps are being taken, such as e-invoice to improve compliance.”
Defending the Demonetisation decision, the Finance Minister said its three main objectives — to flush out black money, formalise the economy, and increase digitisation — were all achieved.
Earlier in the day, Congress MP Anand Sharma kicked off the discussion, saying the “numbers are frightening,” referring to the GDP and investment numbers.
Ashwani Vaishnaw of the BJP said there was “cyclical slowdown” and not a “structural one,” adding that the seeds of the slowdown were sown in 2011-2013. TMC MP Derek O’Brien wondered whether there was any trust in the government and its data.
V. Vijaisai Reddy of the YSR Congress Party hit out at the UPA government, saying the current situation was caused by the “non-performing assets, rampant corruption and lack of reforms” at that time.
Several MPs raised concerns about the disinvestment of public sector undertakings. Congress MP Jairam Ramesh said the government was undertaking “panic privatisation” of PSUs. Sanjay Singh of the Aam Aadmi Party said “profit-making PSUs” were being sold and would eventually benefit “two or three industrialists”.
