The government on Monday said inflation has been controlled and expected the Monetary Policy Committee (MPC) to reflect this reality in their action. “We have controlled inflation and we hope to see its effect on MPC’s decision,” railway minister Piyush Goyal told reporters on Wednesday. The minister said the government is removing bottlenecks to growth and the economy will pick up soon. Although retail inflation shot up almost one percentage point sequentially to 3.36% in August, thanks to an increase in price pressure in food and fuel, it still remains below the central bank’s target of 4%+/-2 percentage points.
The MPC is meeting next week amid expectations it might cut rates to supplement the government’s efforts to revive growth, which has plunged to a three-year low of 5.7% in Q1, FY18. Goyal’s statement comes on a day when senior BJP leader and former finance minister Yashwant Sinha said in a column in The Indian Express that deceleration of the economy had started much earlier and that “demonetisation only added fuel to fire”. Sinha also claimed that according to the old method of calculation, “the growth rate of 5.7% is actually 3.7% or less”, without elaborating on the logic of such an assumption.
On a sequential drop in indirect tax collection in August, Goyal said “it is too early to draw conclusions” on the goods and services tax (GST). The government said on Tuesday it collected Rs 90,669 crore in GST for August, against a revised Rs 94,063 crore for July. It, however, added that many business entities were unable to file their returns, hinting an upward revisions of these figures. On technical glitches and other issues such as delay in duty refunds to exporters following the introduction of the GST, Goyal said there are “bound to be uncertainties around such big transitions”.
“Processes are taking time to get in place. The GST framework captures transactions like never before. We want to educate people about GST, take feedback and improvise,” he said. The government would love to address the issues of exporters, taking states on board, he added. Arguing that the note ban exercise, which was flayed by the opposition for the secrecy around it and supposed inefficacy, Goyal said: “If we would have planned too much, demonetisation would have never happened. It needed a bit of secrecy. We are thankful to citizens to have helped us in rolling it out. Every money has been accounted for. It has ticked all boxes and the roll-out has been smoother than expected.”