Economy

India’s GDP growth to be fastest, sustainable, says FM

Our Bureau | | Updated on: Feb 10, 2022
Finance Minister Nirmala Sitharaman speaks in the Lok Sabha, during the ongoing Budget Session of Parliament, in New Delhi, on Thursday

Finance Minister Nirmala Sitharaman speaks in the Lok Sabha, during the ongoing Budget Session of Parliament, in New Delhi, on Thursday | Photo Credit: -

Differences in growth estimate due to factors under consideration

Finance Minister Nirmala Sitharaman on Thursday attributed the differences in growth estimates by Economic Survey, Union Budget and the Reserve Bank of India to factors for calculation. However, she maintained that Indian economy will achieve fastest and sustainable growth.

The Economic Survey projected real growth rate of 8-8.5 per cent in fiscal tear 2022-23. Though Union Budget has given nominal growth rate estimate of 11.1 per cent and not given the estimate for real GDP growth, but Finance Ministry officials later said that it is likely to be below 8 per cent. On Thursday, RBI projected growth rate of 7.8 per cent for next fiscal.

“Economic Survey’s projection was based on Advance Estimate of National Statistical Office and did not factor impact of Omicron. However, Union Budget did take note of Omicron,” she said while adding that RBI has its own mechanism for projection.

She highlighted projection given by global agencies which is 9 per cent for FY 2021-22, 9 per cent again for 2022-23 and 7.1 per cent in 2023-24. GDP decelerated by 6.6 per cent in 2020-21. At the same time, US economic growth for 2020 is (-) 3.4 per cent which is estimated at 5.6 per cent in 2021, 4 per cent in 2022 and 2.6 per cent in 2.6 per cent.

High capex

Talking about high capital expenditure, Sitharaman quoted a study by RBI where it has been said that one rupee of revenue expenditure has a multiplier effect of 45 paise in first year and additional 10 paise in next year. At the same time, one rupee of capital expenditure will give a multiplier effect of ₹2.45 in first year and then additional ₹3.14 in next year.

On a specific question on umbrella, she said that earlier basic custom duty on finished product was 10 per cent and 5 per cent on parts. However, considering 2.5 crore umbrella pieces being imported every year and that too from just one country (China), it was necessary to protect especially domestic MSMEs. Keeping that in mind, custom duty has been doubled.

Taking strong note of question raised on her being Rajya Sabha Member, she said first she is not nominated member and then she is elected to Rajya Sabha. Also, members from upper house can be part of Council of Ministers. Without taking name of member who raised her Rajya Sabha stature, she said father of the said member who served the upper house thrice put forward put India’s stand strongly in World Trade Organisation. She was referring to then Commerce Minister late Murasoli Maran.

Published on February 10, 2022
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