NEW DELHI (TIP): Finance Minister Arun Jaitley has said demonetisation alone was not responsible for the fall in the GDP growth in the fourth quarter and said 7-8% growth in the current global context is “reasonable by Indian standards”.
The Finance Minister blamed cumulative factors for the fall in growth, including the weak global economic scenario and slowdown in global economy even prior to the demonetisation. The fourth quarter number of 6.1% surprised economists who said the note ban has hurt growth and India lost the tag of the fastest-growing economy to China in the March quarter which pulled down the 2016-17 expansion to 7.1%.
The Finance Minister said demonetisation has established a ‘new normal’. It has helped the government to promote digitisation of transactions, increased the base of taxpayers and sent a strong message that it is no longer safe to deal in cash.
Jaitley said the slowdown in the fourth quarter was due to both domestic and global factors. “There are several factors which can contribute to GDP in a particular quarter. There was some slowdown visible given the global and domestic situation even prior to demonetisation last year,” Jaitley said while addressing a press conference on completion of three years of the Modi government.
After the third quarter GDP numbers of 7% were announced, the government had maintained that claims of a slowdown due to demonetisation are exaggerated. With growth slipping to 6.1% after the government has made many structural reforms would be cause for worry in the third year of the government.
“I do believe that in the current global situation a 7-8% growth, which is at the moment Indian normal, is fairly reasonable by Indian standards and good by global standards”. Sticking to the GST implementation deadline of July 1, the Finance Minister said there is a state of preparedness and GST itself will boost growth.
However, several analysts say there will be a blip again in growth after GST is rolled out and while it would lead to creation of an integrated market, a major fallout will be the shift of trade and market share from the unorganised sector to the organised sector leading to job losses.
On the proposed privatisation of Air India, the Finance Minister said the Niti Aayog has already given its recommendations to the Civil Aviation Ministry to explore various options. “It is for the Civil Aviation Ministry to explore various options,” he added. Oil companies’ merger issue is also being looked at by the ministry concerned, he added.
Source: The Tribune