Jaitley blames global factors for fall in economic growth

Some slowdown visible prior to note ban

Finance Minister Arun Jaitley on Thursday sought to play down the fall in economic growth, attributing it more to global factors such as shrinking trade and increasing protectionism.

He dismissed suggestions linking slower economic growth to Prime Minister Narendra Modi’s decision to demonetise high value currency notes. “There are several factors, which can contribute to GDP (growth) in a particular quarter. There was some slowdown visible given the global situation even prior to demonetisation in the last year,” Jaitley said.

His remarks come a day after the Central Statistics Office released the fourth quarter GDP estimates that pegged economic growth at 7.1%, much slower than the 8% achieved last year.

The finance minister dubbed the 7.1% annual growth as “fairly reasonable”, given the current global situation. He was addressing the media on the completion of three years of the NDA government.
Jaitley listed resolving the issue of non-performing assets of banks and encouraging private sector investments as the major challenges before the government.

He said sluggish private investments were linked to the inability of the debt-laden banking sector to extend loans.

Last month, the Centre had promulgated an Ordinance granting more powers to the Reserve Bank of India to encourage lenders to writedown outstanding corporate loans.

“RBI was taking measures under the existing mechanism. We have now taken another step and there would be visible action taken under the new mechanism in the next few days,” Jaitley said.

The Minister said the demonetisation exercise had resulted in greater movement towards digitisation, rise in taxpayer base leading to revenue increase of 18%, and sending a clear message that it was no longer sage to deal in cash.

Jaitley said the past three years have been challenging for the world economy due to a financial slowdown, shrinking trade, and growing voices of protectionism among major powers.

Three years back, he said India was not on the global radar. “Monsoon was also bad and the credibility of the legacy (of the last government) was bad,” he said.

“We have been able to restore the credibility of the economy. There were three important factors behind it. First, decisiveness, the ability to take bold decisions. Second was to check corruption and ensuring transparency. Third is direction, which was clear and growth oriented to provide benefits to the weaker sections of society,” he said.