Economy

Economy back on the rails, government pumping fuel into all engines: Finance Minsiter

Our Bureau New Delhi | Updated on February 11, 2020

FDI inflows, forex reserves, major indices all point to a revival: Nirmala Sitharaman

Finance Minister Nirmala Sitharaman on Tuesday claimed that the economy is back on a sound footing with seven key green shoots clearly visible. She said that the government is making all efforts to keep all the four engines of the economy running.

Responding to a debate on the General Budget (Part A of the Union Budget) in Parliament, she listed seven important economic indicators showing green shoots. “Global sentiment is in favour of India,” she said, pointing to the total foreign direct investment (FDI) inflows, which during April-November of this fiscal rose to $24.4 billion from $21.2 billion during the corresponding period of last fiscal. Net foreign portfolio investment inflows rose to $12.6 billion from $8.7 billion during the same period. She was hopeful that the National Infrastructure Pipeline would bring in more FDI into brown-field projects too.

Encouraging signs

Sitaraman said that industrial growth is on the rebound with the Index of Industrial Production (IIP) — representing industrial growth — at 1.8 per cent in November and turning positive after three successive months of contraction. Another indicator of manufacturing activities — Purchasing Managers’ Index (PMI) — surged to 55.3 in January, a eight-month high.

The Minister said foreign exchange reserves are at $466.69 billion (as on January 24, 2020) as against $413 billion on March 31, 2019. “It reflects increasing confidence in the Indian economy,” she said. She added that GST collection rose to over ₹ 1.10-lakh crore.

“Between April, 2019 and January 2020, GST collection crossed ₹1-lakh crore six times, which shows there is increased economic activity,” she said.

There have been allegations that the economy is running on just one of the four engines (public investment, private investment, consumption and export), and that is public investment.

The Finance Minister listed measures such as lowering corporate tax, removing dividend distribution tax, reducing Goods & Services Tax (GST) on electric vehicles, amending the Insolvency & Bankruptcy Code (IBC) for faster disposal of cases, and amalgamating 10 banks into four, which she said would pump fuel into all the four engines.

Control over fiscal deficit

“We have respected the Fiscal & Budget Management Act (FRBM) from 2014-15 till today,’’ she said, while reiterating the Government’s commitment to controlling the fiscal deficit.

She said during the tenure of the Modi Government (2014-15-till date), the fiscal deficit was in the range of 3.3-4.1 per cent of the GDP as against 4.5-6.6 per cent during 2008-09 to 2013-14 (tenure of Manmohan Singh’s Government).

Reply in Rajya Sabha

Later, replying to a debate in the Upper House, Finance Minister hit back at Congress’ P Chidambaram.

On Monday, the Congress leader had said that ‘incompetent doctors’ were attending to the economy. She said, FDI “ran out of the country in 2012-13” under “competent doctors” overseeing the economy.

“We are certainly predisposed about not repeating the mistakes of UPA,” she said, while continuing to attack the Congress by listing the twin balance-sheet crisis faced by the banks and the mounting NPA and fleeing defaulters. Also, free trade agreements (FTAs) entered into by the UPA are hurting the country, she said.

Published on February 11, 2020

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