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Finance Minister Nirmala Sitharaman on Tuesday claimed that the economy is on coming back on sound footing with seven key green shoots are clearly visible. She also assured that the Government is making all effort to keep all the four engines of the economy running.
Responding to debate on General Budget (technically known as Part A of the Union Budget), she listed seven important economic indicators showing green shoots. “Global sentiment is in favour of India,” she said while informing that total Foreign Direct Investment (FDI) inflow during April-November period of current fiscal rose to $24.4 billion from $21.2 billion during corresponding period of last fiscal. Similarly during same period net foreign portfolio investment (FPI) inflow grew to $12.6 billion from $8.7 billion. She expressed hope that announcement of National Infrastructure Pipeline would bring more FDI in brown field projects also.
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She said that industrial growth is on rebound with change in Index of Industrial Production (IIP), representing industrial growth, turned positive with 1.8 per cent in November after three successive months of contraction. Another indicator showing manufacturing activities, Purchasing Managers’ Index (PMI) for Manufacturing surged to 55.3 in January which is eight month high.
The Minister informed the house that foreign exchange reserve is 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. Bringing another important indicator into the picture, she said that GST collection rose to over Rs 1.10 lakh crore. “Between April, 2019 and January 2020, GST collection crossed Rs 1 lakh crore six times which shows there is increased economic activity,” she said while adding that BSE SENSEX showed a rise of 5.6 per cent from March, 2019.
Four engines of growth
There have been allegations that the economy is running on just one of four engines (Public Investment, Private Investment, Consumption and Export) and that is public investment. The Finance Minister listed measures such as lowering corporate tax to removing dividend distribution tax to reducing Goods & Services Tax (GST) on electric vehicles, amendment in Insolvency & Bankruptcy Code (IBC) for faster disposal of cases to amalgamation of 10 banks into four and many others. to pump fresh fuel in all the four engines.
Deficit
‘We have respected Fiscal & Budget Management Act (FRBM) from 2014-15 till today,’ she said while expressing Government’s commitment to control the fiscal deficit – difference between income and expenditure of the government. She said during Modi Government’s tenure (2014-15-till date) fiscal deficit ranged between 3.3 to 4.1 per cent of GDP (Gross Domestic Products) as against 4.5 to 6.6 per cent during 2008-09 to 2013-14 (tenure of Manmohan Singh’s Government). “This happened even when economy was managed by competent ‘Doctor,’’ she said sarcastically.
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