Growth slow, but no recession yet, says Nirmala Sitharaman

New Delhi: Asserting while growth may have slowed, the economy would never slip into recession, finance minister Nirmala Sitharaman said Wednesday the steps the government had taken after her maiden Budget had started bearing fruit and that some sectors, like automobiles, had shown signs of a recovery. However, Opposition MPs from the Congress, Trinamul Congress and Left parties walked out of the Rajya Sabha in protest during her reply to a short duration discussion on the economic situation, saying the minister was simply reading out her Budget speech, not addressing issues facing the economy. The minister told the House that Prime Minister Narendra Modi was himself taking a personal interest “so that the economy can be on a higher trajectory”.

The Opposition members highlighted issues like PSUs’ disinvestment, demonetisation, unemployment and the decreasing purchasing power of consumers to counter the treasury benches’ claim that economies worldwide were facing a slowdown.

Replying to the discussion, Ms Sitharaman said direct tax and GST collections had seen an increase in the first seven months of the current fiscal year, compared to the same period last year. Comparing GDP growth during the Narendra Modi government since 2014 and that seen in the previous five years under UPA-2, the minister said inflation was below target range, economic growth was much better, as were other macroeconomic indicators.

“Looking at the economy in a discerning view, you see growth may have come down, but it is not a recession yet, it won’t be recession ever,” the finance minister said.

Blaming the fall in GDP in the past two financial years to the stress on banks due to non-performing assets (NPAs) or bad and heavily indebted corporates, due to UPA lending, the minister  rejected criticism that her July 5 Budget had failed to address the concerns of a slowing economy and so had to announce measures within a month of the Budget being passed by Parliament. Ms Sitharaman said both the Economic Survey and she had recognised the need for recapitalisation of banks and reforms, and this was mentioned in her Budget speech.

On GST, she said of Rs 6.63 lakh crores net collections targeted in the year through March 31, 2020, Rs 3.26 lakh crores was collected in April-October. Month-wise GST collections had grown year-on-year, she said, adding that direct tax collections at Rs 6.86 lakh crores in April-October too had seen growth of 4.8 per cent.

Earlier, Congress MP Jairam Ramesh said it was important for the government to acknowledge the reality that for the past eight quarters GDP growth has declined. He also said the country is seeing the “prolonged effects” of demonetisation”, which was called “a political masterstroke” but the economy had to pay a heavy price for it. He said the haste with which GST was pushed had created problems for small and medium enterprises.

BJP’s Sudhanshu Trivedi said the fears expressed by the Opposition were driven more by anti-Modi sentiments than facts. Countering the charge of the government being pro-rich, he pointed to Jan Dhan Yojana, calling it the biggest financial inclusion initiative. Raising doubts over the figures given by the government, BSP’s Satish Chandra Misra said the government should reduce its extravagance and cut down on expenses.

Later, outside Parliament, Congress spokesman Rajeev Gowda attacked the ruling side over the economy, saying it was time for the Modi government to wake up, take note of “real statistics” and act to fix the problem. Saying there was agrarian distress but the government was trying to ensure no data emerges, Mr Gowda said rural India was “driven into a hole” by the Modi government.