Indian Finance Minister Nirmala Sitharaman sought to dispel concerns regarding the state of the economy, saying the country is moving towards achieving the government’s target of becoming a US$5 trillion economy by 2024.
The minister said this in response to an earlier statement by a senior opposition Congress party leader P Chidambaram that the country’s economy was ailing and the government has not taken enough steps to revive it.
While replying in a debate on the union budget in the Parliament, Sitharaman pointed out that increasing foreign direct investment, rise in factory output and the monthly goods and services tax collection crossing one trillion rupees mark for three months in a row are indications of green shoots in the economy.
The minister said the forex reserve is at an all time high and the stock market is upbeat. She said the government’s focus is on four engines of growth, which include private investment, exports, private and public consumption.
With regard to public investment, she said the government had in December announced a National Infrastructure Pipeline that envisages an investment of 1.03 trillion rupees for infrastructure development across the country in the next four years (till 2024-25).
The minister claimed the industrial activity as indicated by the Index of Industrial Production is on a rebound. “The index in November 2019 has registered a positive growth of 1.8% as compared to a contraction of 3.4% in October 2019 and 4.3% in September 2019,” she said.
She remarked that the fiscal deficit was higher during the previous government “when the economy was managed by competent doctors.” She was responding sarcastically to Chidambaram’s jibe that the economy was being attended by “incompetent doctors.”
While taking part in a debate in Parliament on Monday, the former minister said: “The economy is not in ICU, but it is waiting to be pushed into the ICU. It is being kept outside and looked after by incompetent doctors.”
He cited the departure of former Reserve Bank of India governor Raghuram Rajan and former chief economic advisor Arvind Subramanian and remarked that “every competent doctor has left the country.”
Chidambaram has been critical of the government’s action in reviving the economy amid rising employment and falling consumption. He said in the Parliament that the government was “living in denial” and no measures were being taken to revive demand. “The only way to revive demand is to put money in the hands of people and not in the hands of corporates,” he said.
Regarding the current government’s recent budget, Chidambaram remarked in a TV interview that he would rank it not more than 1 out of a maximum 10.
India’s gross domestic product growth is seen dipping to an 11-year low of 5% in the current fiscal year, mainly due to poor showings by the manufacturing and construction sectors, according to government data. Various economists have expressed doubts over the government’s $5 trillion economy target. They point out that the economy will have to grow at an annual rate of 9% to achieve it.
In December the International Monetary Fund expressed concern about India’s economic downturn and called for “urgent steps” to return the country to growth. In its annual review, the IMF observed that declining consumption and investment, as well as falling tax revenue, had combined with other factors to put the brakes on one of the fastest-growing economies in the world.