New Delhi: Finance minister Nirmala Sitharaman on Tuesday claimed the economy is on the mend, relying on seven indicators to show that green shoots have started to emerge in the economy.
India’s economic growth is estimated by the National Statistical Office to hit an 11-year low of 5% in 2019-20. The International Monetary Fund has projected growth to recover to 5.8% in 2020-21.
Replying to a debate on the Union budget for 2020-21 in the Lok Sabha, Sitharaman pointed to rising foreign direct investments (FDIs), foreign portfolio investments (FPIs), rebound in industrial activity, rising Purchasing Managers’ Index, increasing forex reserves, robust collections of the goods and services tax and a rising Sensex. “These are the seven green shoots showing that the economy is moving forward," Sitharaman said.
The finance minister said net FDI inflow in April-November was $24.4 billion, higher than $21.2 billion in the same period a year ago. Net FPI inflows during April-November jumped to $12.6 billion from $8.7 billion in the same period of the previous year. “The announcement of the national infrastructure pipeline will increase FDI inflow into the country even for brownfield projects."
Factory output made a modest recovery in November, growing at 1.8% against a contraction of 3.4% in October. The manufacturing PMI also hit a near eight-year high of 55.3 in January, up from 52.7 in December.
“The forex reserves, which have been built up from $413 billion by end of March 2019 to $466.69 billion by 24 January 2020, reflect an increasing confidence in the Indian economy," Sitharaman said.
She said that between April 2019 and January 2020, gross GST revenue crossed ₹1 trillion six times, pointing to increased economic activity.
The finance minister also said the Sensex “remained upbeat", rising 5.6% till 31 January from March-end 2019.
In her reply, Sitharaman sought to counter criticism from Opposition parties during the budget discussion on Monday, elaborating on the steps taken to boost investment, consumption and exports and on the public spending made in key sectors.
Speaking in the Rajya Sabha, Sitharaman hit back at former minister P. Chidambaram for his remark that “incompetent doctors are attending to economy", saying there was nothing to learn from the people, who gave a mountain of bad loans and the twin balance sheet crisis.
On Monday, Chidambaram said the moribund economy was not yet in ICU, but still needed to be wheeled into an ICU for treatment by competent doctors.
Sitharaman said there was more sarcasm than content in Chidambaram’s criticism of the budget. “We are certainly predisposed about not repeating mistakes of UPA." She went on to list the twin balance sheet crisis faced by banks, the mounting bad loans and fleeing defaulters.
The finance minister said that while FDI “ran out of the country in 2012-13" under “competent doctors" overseeing the economy, free trade agreements signed during UPA’s tenure are still hurting Indian industry. “We will not want to learn from the competent doctors during whose time inflation was running in double digits," she added.
Sitharaman said under Prime Minister Narendra Modi, fiscal discipline has been maintained all through. “No one sector had seen any cut in its resources. Government is keen to work together with everybody and we want the economy to gallop."