In a bid to downplay criticism of economic slowdown, Union minister Ravi Shankar Prasad on Saturday said that decline in GDP growth in Q1 is temporary and that the economy will bounce back in the second quarter as the macro fundamentals are strong, news agency PTI reported. Prasad, who is minister for IT and law and justice, said that macro fundamentals of the economy are very strong, and hence, growth will definitely recover going forward.
“The GDP grew 7.5 per cent in 2014-15, 8 per cent in 2015-16 and 7.1 per cent in 2016-17. Only in one quarter, that is the first quarter of the current fiscal, GDP growth was at 5.7 per cent. I believe it will bounce back in the second quarter,” Prasad was quoted as saying.
Referring to the decline in growth rates to the shake-up of the economy arising from GST rollout, Prasad said, “when we build a bridge, we need to divert traffic, which leads to long queues of vehicles. But that is temporary, as things get normalised once the bridge is opened.”
“Just like that, the GST is a new regime which led to a shake-up. But, since the fundamentals of our economy are strong, we will definitely recover,” he was quoted as saying. The minister also defended the timing of the tax cuts announced by the GST Council last evening, which mostly benefit the poll-bound Gujarat. He said: “This is a massive tax reform implemented in such a large country. So, if there is a need for changes, why not. The (Narendra) Modi government is not an authoritarian government. We are a pro-people government which listens to the people’s problems.”
Prasad’s comments come in the backdrop of GST council’s major amendments to the existing rules, aimed to give relief to small and medium businesses on filing and payment of taxes. The Council has eased rules for exporters and cut tax rates on as many as 27 items.