Finance Minister Nirmala Sitharaman told the Rajya Sabha on Wednesday, November 27 that growth may have slowed down but the economy will never slip into recession. She said that while maintaining that the government is up for the challenge and is taking necessary measures to put the economy on a higher growth trajectory.

“If you look at the economy with a discerning eye, you see that growth may have come down… but it is not a recession yet and won’t be a recession ever,” Sitharaman said.

Steps and measures taken by the government after her maiden Budget have started bearing fruits and some sectors such as automobiles have shown signs of recovery, FM claimed. 

Sitharaman Hits Out At Opposition

Talking about the state of the economy in the Rajya Sabha, the finance minister said that the Narendra Modi government has been more fiscally disciplined than the earlier Congress-led UPA government. 

The finance minister then went on to say that the GDP growth during the BJP government since 2014 was better, inflation was below the targeted range, economic expansion was much better and so were other macroeconomic indicators as compared to that witnessed in the previous five years under the UPA-II regime. 

“In the July budget, I pegged it at 3.3% (of GDP). Although the Fiscal Responsibility and Budget Management Act has been there since 2004, on average, the fiscal deficit during UPA-2 was 5.5% of GDP. People who ran it well above 5%, should know what is fiscal management,” Sitharaman said. 

So far, the government has said that it will maintain the fiscal deficit target of 3.3% of GDP for 2019-20. 

On the Goods and Services Tax, the Finance Minister said various rate cuts implemented by the GST Council were to benefit consumers and to boost manufacturing growth.

“To help consumers and to induce growth in manufacturing, the government consciously recommended a decrease in GST rates for 90% of the items from 28% to 12% or 18%, and that helps the consumers,” Sitharaman said.

Slipping Growth Projections For Economy

The Indian economy has slumped down to its lowest in six years, growing at 5% in the June quarter. Most forecasters have cut their growth projections for 2019-20 to below 6%, and expect the economy to have grown below 5% in the September quarter, data for which will be released on Friday.

India Ratings on Tuesday downgraded its growth forecast for India to 5.6% from an earlier 6.1%.

“If the central government adheres to the budgeted fiscal deficit of 3.3% of GDP by cutting/rolling over expenditure, then Ind-Ra believes FY20 GDP growth could be even lower than 5.6%,” the report said. 

“I want to assure that we shall ensure that every sector and the challenges will be heard by us and we shall respond positively,” the finance minister said in the parliament.

Opposition Lashes Out

Congress Rajya Sabha member Jairam Ramesh in his intervention during the discussion said GDP growth has been sliding for the last eight quarters and the government needs to first acknowledge that the economy is in a critical situation.

“Cumulative effect of demonetization, which was a political masterstroke, has cost the economy dearly. GST is a major reform, but the haste with which GST was pushed through has created many problems for trade, industry and exporters. Panic privatization by the government may yield short-term revenue, but in the medium and long term, will weaken the economy,” Ramesh said. 

Defending demonetisation, the Finance Minister said its three main objectives, to flush out black money, formalise the economy, and increase digitisation were all achieved.

A number of opposition members staged a walkout in between Sitharaman’s speech on the Indian economy.

Also Read: India’s Growth Forecast Downgraded To 5.6% From 6.1% For Current Financial Year By Fitch Ratings