Facing the Opposition’s criticism over economic growth hitting a three-year low in the first quarter, Prime Minister Narendra Modi hit back on Wednesday, sticking to his view that demonetisation yielded rich dividends, but said the troubles faced by small businesses from the goods and services tax (GST) would be addressed with an open mind.
Stating that economic expansion hasn’t dropped to 5.7% for the first time, he said the government will continue with the reforms process, keeping financial stability in mind.
Asserting that the fundamentals of the economy remain strong, the prime minister said the government added over 19 lakh new taxpayers after the GST was implemented and also brought down the cash-to-GDP ratio to 9% now from 12% before demonetisation, which would discourage cash transactions. Even the registration of 2.1 lakh companies out of 3 lakh suspicious (shell) firms identified after the note ban has been cancelled.
Speaking at the Institute of Company Secretaries of India golden jubilee function, Modi said he had asked the GST Council to review bottlenecks and technological hindrances to smoothen the process of tax filing and make compliance easier. Last week, finance minister Arun Jaitley made a similar, strong attempt to defend the state of the economy after senior BJP leader Yashwant Sinha made allegations of a sharp economic deceleration under Jaitley’s watch and criticised his the handling of demonetisation and GST.
Taking a dig at the Congress, which is at the forefront of criticising the government’s handling of the economy, Modi said quarterly GDP growth dipped to 5.7% or below eight times during the UPA regime when the country was faced with very high inflation as well as current account and fiscal deficits. “Inflation was more than the GDP growth during previous regime when high price rise, fiscal deficit and CAD made headlines,” Modi said.
During the current NDA regime, the almost double-digit (retail) inflation has come down to less than 3% (in July, which rose to 3.4% in August), current account deficit came down to 2.4% (Q1FY18) and fiscal deficit reduced to 3.5% (FY17), he said.