Promises more sector-specific steps if needed, says measures already taken bearing fruit
Finance minister Nirmala Sitharaman on Wednesday promised more sector-specific steps to boost sagging economic growth and asserted that the 32 measures already initiated by the government have started “bearing results”.
Replying to a short-duration discussion in the Rajya Sabha on the economic situation, she defended the government’s handling of the economy and stressed that it will never slip into recession. “Looking at the economy with a discerning view, you will see that growth may have come down but it is not recession yet, it won’t be recession ever,” Sitharaman said.
The FM attributed the deceleration in GDP growth in the past two years to the lagged effect of the twin balance sheet crisis (bad loan-encumbered banks and over-leveraged firms), caused by the UPA’s indiscriminate lending.
The economic growth collapsed to a 25-quarter low of 5% in the April-June period, as expansion in private consumption expenditure, a key driver of gross domestic product, crashed to just 3.1%, against 7.2% in the March quarter. Thanks to general elections and the accompanying uncertainties in policy directions, the push from the government to prop up the economy, too, was limited, as its consumption expenditure rose just 8.8% in the June quarter, against 13.1% in the previous three months. To make up for the low expenditure in the first quarter, the government has since been trying to improve spending and help stimulate growth.
Sitharaman listed 32 recent steps — including the sharp cut in the corporate tax rate, ongoing amalgamation of 10 state-run banks into four, upfront capital infusion into public-sector lenders, proposal for a Rs 25,000-crore fund and a new export scheme — to argue that her government is swiftly responding to every challenge.
She justified the plan to infuse Rs 70,000 crore (over Rs 60,000 crore have already been provided) into state-run banks in FY20, saying loans of as much as Rs 2.5 lakh crore could be extended to retail customers and NBFCs by these banks in just two outreach programmes in October because they were adequately capitalised.
Seeking to assuage concerns over lower-than-expected tax collections, she said both the direct tax and GST mop-ups have risen in the first seven months of FY20 from a year before.
Using a barrage of data, she argued that leading macro-economic indicators — from GDP growth to inflation and fiscal deficit — look much better in the Modi era than in the UPA-II regime. Direct tax-to-GDP ratio, she said, rose from 5.5% in 2014-15 to 5.98% in the last fiscal. Even external debt-to-GDP ratio dropped from 23.9% in 2014 to 19.7% in 2019, she stressed.
In the first half of the current fiscal, revenue receipts grew by 18% and that spending hasn’t been compressed. Revenue expenditure jumped almost 14% and capital expenditure by 15.3% in the April-September period from a year before.
Commenting on GST, She said out of the Rs 6.63 lakh crore net collections targeted in the current fiscal, Rs 3.26 lakh crore had been collected during April to October. GST collections have grown year-on-year. At Rs 6.86 lakh crore in April-October period, direct tax mop-up, too, saw a 4.8% rise. “GST is not doing badly. (But) It could do better,” she said.