State of the economy: Efforts of RBI, govt paying off, says FM Nirmala Sitharaman

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Published: February 28, 2020 12:15:54 AM

At Guwahati, the minister held a series of meetings with various stakeholders, including experts and industry executives, to ensure that far-flung areas in the north-eastern region are given greater access to credit.

She conceded that some indicators may have weakened in recent months after showing signs of an uptick but added that they, too, will revive soon.She conceded that some indicators may have weakened in recent months after showing signs of an uptick but added that they, too, will revive soon.

A day after prodding state-run banks to shun unreasonable risk aversion and boost lending, finance minister Nirmala Sitharaman on Thursday painted a rosy picture of the economy, insisting that green shoots of a recovery are not just visible but sustainable, and that “concerted efforts” of the government and the central bank have started yielding results.

She conceded that some indicators may have weakened in recent months after showing signs of an uptick but added that they, too, will revive soon. Her statement came on a day when non-food credit data showed growth crashed to just 6.3% year-on-year in the fortnight through February 14, the lowest since May 2017.

Industrial production, having witnessed a marginal rise of 1.8% in November after three straight months of contraction, shrank again in December. She also asserted that the latest Delhi violence and anti-CAA protests haven’t dampened investors’ sentiment. She also added that the government would move into a less-litigation tax regime, which will help investors.

Speaking to media in Guwahati, the minister said: “There are monthly ups and downs in some indicators. That shouldn’t worry. Very clearly, the FDI inflows are keeping steady, our foreign exchange reserves are doing very well… Inflationary pressures are coming down (after the recent spike in vegetable prices).”

“You also have the RBI not just monitoring inflation but also coming out with steps that would be treated as stimulus to growth – particularly the steps for MSMEs and realty… So there is a lot of concerted efforts by the government and the RBI and, as a result, I can very clearly see that the mood is gradually changing,” she said.

To buttress her case that foreign investors are unfazed by perceptions of an economic slowdown here, the minister said in her latest visit to Saudi Arabia, several prominent investors showed interest in the recently-announced National Infrastructure Pipeline. Under this pipeline project, the government has laid out a road map for its proposed investments of over Rs 102 lakh crore in infrastructure over six years through FY25, pledging 70% of the capital expenditure for energy, roads, urban development and railways and envisaging an important role for private investors.

Commenting on the likely impact of the coronavirus outbreak, Sitharaman said on Thursday, as per industry feedback, raw material supplies to companies would likely be hit if situation in China doesn’t improve in two months. “We are trying to see what best we can do,” she said.

At Guwahati, the minister held a series of meetings with various stakeholders, including experts and industry executives, to ensure that far-flung areas in the north-eastern region are given greater access to credit. She asked state-run banks to set up more branches and widen their network in these states. Top finance ministry officials, including finance secretary Rajiv Kumar, economic affairs secretary Atanu Chakraborty and revenue secretary AB Pandey, were also present in the meetings.

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