Sitharaman said the government’s revenue targets were set after due consideration and if there was any shortfall in realising those, it would be dealt with as situation evolved.
Emphasising that there is no reason for “unnecessary pessimism” over the country’s economic slowdown, finance minister Nirmala Sitharaman on Friday said the government would make “one more announcement” to support the economy. She, however, did not give any time frame.
The finance minister, however, said she would not be “speculating” on future GDP growth numbers. “I am not going to speculate. We are taking every possible measure to extend help to every sector,” she replied to a question asked by FE on when the government would see the GDP number going back to over 7%.
Sitharaman said the government will make “one more announcement” to support the slowing economy. “We are looking at challenges various sectors are facing…the government is taking a considered view on how we have to respond to each one of them, so that those sectors get solutions they have asked for,” she said while speaking to reporters in Kolkata after meeting officials of the central tax authorities and trade bodies.
She said the government has already “somewhat” responded to issues the automobile sector is facing. It is the GST Council which may decide on tax rate cut on cars to boost consumer demands.
Sitharaman said the government’s revenue targets were set after due consideration and if there was any shortfall in realising those, it would be dealt with as situation evolved. “The targets to various tax departments have been set after consultation with them. If any such situation arises, we will deal with it (revenue shortfall),” she said.
Notably, India’s real GDP growth slumped to a 25-quarter low of 5% in Q1FY20. Private consumption, the main engine of the economy, appears to have suffered the biggest blow with a year-on-year growth of just 3.1% (the lowest since Q3FY15). There has been a swift slide in private consumption since the second quarter of last fiscal when it grew at 9.8%.
Ratings agency Crisil has cut its forecast for GDP growth in 2019-20 to 6.9% from its earlier forecast of 7.1%, citing weak monsoon, slow global growth and poor high-frequency data for the first quarter of the financial year.
The government recently announced a series of steps to give a fillip to consumption demands and investments. It is prodding banks to lend and capitalising them to the extent it can, while also facilitating liquidity support to NBFCs, including housing-finance firms.
The Centre has also announced a major consolidation in the country’s banking sector that would see ten public-sector banks being merged into four big entities, enhancing their credit capacities. The FM on Friday said the government has not yet taken a call on the use of the funds from the Reserve Bank of India.