Finance minister Nirmala Sitharaman acknowledged on Wednesday that growth had slowed, but ruled out the risk of the economy ever slipping into a recession, in a discussion on the economy that prompted some Opposition members to walkout from the Rajya Sabha.
“If you are looking at the economy with a discerning view, you see that growth may have come down but it is not a recession yet; it will not be a recession ever,” Sitharaman said.
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GDP growth accelerated from 6.4% at the end of 2009-2014 to 7.5% in 2014-2019, Sitharaman said, comparing growth in the first term of the BJP-led NDA government and the second term of its predecessor, the Congress-led UPA.
Measures taken to boost economic growth are bearing fruit, Sitharaman said, adding that the slowdown was a cyclical phenomenon that would bottom out by March, in response to opposition members who warned that the economy was heading towards a crisis.
Trinamool Congress and the Aam Aadmi Party, Anand Sharma of the Congress said the current slowdown could not be labelled a cyclical phenomenon. “In the last few years, the economy has suffered. Industry has gone down and people do not even have money to buy day-to-day articles. Situation in the rural regions is even worse,” he said.
“We are staring at a deep economic crisis, which is India specific,” Sharma said.
He added that all four engines of economic activity — investments, industrial production, credit offtake and exports — were shutting down.
“The numbers are frightening. GDP growth has fallen and is lowest in seven years, investment rates have come down by seven percentage points, IIP (Index of Industrial Production) has fallen, manufacturing sector has contracted,” Sharma said.
Derek O’ Brien of the Trinamool Congress (TMC) said millions of jobs had been lost in various sectors, including auto and textiles. Countering Opposition charges, Aswini Vaishnaw (BJP) termed the current situation a cyclical slowdown.
“It is not a structural thing and will bottom out by March and it will be followed by strong growth,” he said.
Sitharaman blamed the decline in GDP growth in the last two financial years to the lag effect of the so-called twin balance sheet crises — of stress on banks because of a pile-up of non-performing assets and heavily indebted corporate entities which she traced to lending during the UPA regime.
Sitharaman said her reply was based on facts and the members who walked out did not have the “inner strength” to hear her out. “It is shocking… a short duration discussion is called and we agree. I hear everyone’s speeches and when I want to reply they don’t have the inner strength to hear me,” said the minister, who went ahead with her reply after the walkout.
Economic growth may have slowed for the sixth consecutive quarter in July-September to 4.7%, Fitch group firm India Ratings and Research said on Tuesday, as it lowered GDP growth forecast for the current fiscal for the fourth time.
(With Agency Inputs)