At a time when India’s economy is faced with slowing GDP growth and rising inflation, Finance Minister Nirmala Sitharaman has said that though growth may have come down, there is no recession in India.
Speaking in the Rajya Sabha during a debate on the state of the economy, she said that the economy needed a lot of support and every step taken by the government was for its development.
Comparing economic data of the UPA-2 regime (2009-14) with the present government’s, she said that GDP growth was 6.4% during UPA-2’s time, while it was 7.5% during the first term of the NDA. Talking about core inflation, she said that while it was 9.4% during 2009-2014, it was only 5.1% during the first term of the Narendra Modi-led government.
“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,” she said.
She also said that FDI inflows in 2009-14 were $189.5 billion, while during the term of the current government, it rose to $283.9 billion from 2014-19.
Speaking of the fiscal deficit, the minister defended the government saying that the fiscal deficit during its term was on an average at 3.68%, while it was at 5.5% during the UPA regime.
The minister reiterated that the government recognised the current slowdown and has taken a number of steps to revive the economy. She said that the government followed a 4R agenda where it recognised issues, went for recapitalisation, resolution and reform measures to improve the economy of the country. Of these, she cited reforms such as mergers of public sector banks, reduction in corporate tax, GST, fast resolution through the Insolvency and Bankruptcy Code (IBC), among others.
Speaking of the banking sector, she said that the government recognised the stress in the sector and has been taking steps to address them. However, she said that the non-performing assets (NPAs) that banks are saddled with currently, are a result of the UPA-2 time.
She said that the economy is suffering from a twin balance sheet problem and that the effect of this has resulted in fall in GDP in the last two financial years.
"Corporates took money from banks. Their balance sheets went back because they no longer could make profits, as a result, they couldn't pay the bank. Bank's balance sheet went back. So, there is the twin balance sheet problem. In order to address that, we came up with the four R's policy. Recognition of the problem, recapitalisation of the bank, resolution of the problem, and reforms...The banks NPAs naturally increased after recognising the problem,” she said.
The Finance Minister also defended demonetisation, claiming that the move helped not only in culling out black money, but also resulted in the formalisation and digitisation of the economy.
“Objective with which it (demonetisation) was brought, to take out black money and formalise the economy and its digitisation have all been achieved because of demonetisation,” she said.
During the course of her speech, the Parliament proceedings were disrupted and opposition parties walked out of the Rajya Sabha.