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Hope India Will Remain Fastest Growing Economy, Says FM Arun Jaitley

Pinning hopes on good monsoon, Finance Minister Arun Jaitley has said India is expected to remain the fastest growing major economy even as he stressed the government is making efforts to address various challenges including bad loans

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Pinning hopes on good monsoon, Finance Minister Arun Jaitley on Thursday (04 August) said India is expected to remain the fastest growing major economy even as he stressed the government is making efforts to address various challenges including bad loans.

The Minister also dismissed apprehensions with regard to CSO data on the GDP numbers, saying that IMF, which is the most credible international body, has accepted the data.

Replying to a debate in Lok Sabha on the first batch of Supplementary Demand for Grants for 2016-17 which was approved later, he said, "for the last two years, we were the fastest growing economy in the world. I hope this year we will retain that position."

The country recorded a growth rate of 7.2 per cent during 2014-15 and 7.6 per cent in 2015-16.

In the current year, he said, the rural demand will get a boost on the back of good monsoon after consecutive year of drought.

"I think there is a big silver lining that after two consecutive years of bad monsoons, so far we are seeing good monsoon in the country and the result of this is that this will give rise to rural demand...This year I hope it will not only improve farm production but increase purchasing power of the rural sector," the Finance Minister said.

These developments are going to add to the economic growth, he added.

He also expressed hope that the government is going to meet its fiscal deficit target for the current fiscal given the buoyancy in the tax collection.

The Lok Sabha later passed the first batch of Supplementary Demand for Grant for 2016-16 envisaging additional spending of 1.03 lakh crore including cash outgo of Rs 20,948 crore.

On why the government has allocated about Rs 82,000 to the Food Corporation of India (FCI), Jaitley said, it is a technical grant in the nature of loan help FCI save on interest cost.

Referring to the challenges, the Finance Minister said the slowing global trade, IMF's projection of lower growth and competitive devaluation of currency will have implications for the Indian economy.

Observing that challenges in the field of exports are grim, Jaitley said there has been some improvement in the last two months but it remains to be seen if it is "patchy or a pattern."

Global environment, he said, is generally unsupportive of trade.

Acknowledging that high NPA level in the public sector banks is unacceptable, he said the government has been taking steps to improve the situation.

The public sector banks, he added are making operational profit but higher provisioning as per the RBI norms is adversely affecting their bottomlines.

"...it is seeing some revival, they are showing operational profit...but provisioning for those NPAs has to be done under the RBI norms and therefore once you add the provisioning the process then is not visible," he said.

"In this environment, one important silver lining for India has been that oil prices have come to our rescue...we are able to save certain amount of forex," he said.

Besides lower crude oil prices, he said, policy changes are also supporting growth. He was referring to the recent policy initiative in term of GST law passed by the Rajya Sabha yesterday.

Responding to criticism that there has been reduction in the fund allocation to MNREGA, Jaitely stressed that government must be judged by how much it spend on the scheme.

Unlike the UPA government, he said, the actual expenditure on social sector scheme in NDA government has exceeded the Budget estimates.

As regards MNREGA, the government has planning to spend Rs 43,500 crore, which include additional Rs 5,000 crore given through Supplementary Demand, during the current fiscal.

On cooperative federalism, Jaitley said states are competing and seeking investments, while concentrating on infrastructure building.

With regard to spurt in foreign investment, he said, "investors want to invest in countries which are growing...we have largest road building in the world...we have been prudent enough to open various sectors of the economy and opening."

"We have a significant increase as far as FDI is concerned and more of it will come if we are able to conduct ourselves in a manner and increase our own credibility in the among investors both within the country and outside," he said.

With the passage of GST Bill in the Rajya Sabha yesterday, it would no more be a matter of discussion among investors who were waiting for it for long, the Finance Minister said.

On 'ease of doing business', he said, India's rank has improved to 142 from 189. "Last year, we improved by 12 points and this year I am hoping we will improve even more," he said.

With regard to taxation, he said effort is to keep rates reasonable and create an atmosphere to encourage people to willingly pay tax.

He further said that abolition of income tax, as suggested by a member, "is no answer...it is only a philosophical question".

He added, "we are trying to change the attitude of not paying taxes."

On the fiscal management, Jaitley said, the Fiscal Responsibility and Budget Management (FRBM) committee has been set up to give range for fiscal deficit instead of a target.

"I had announced the committee. It is functioning for the last two months. There are 5 eminent members in the committee and they have been meeting experts and studying the pattern across the world," he said.

Currently, he said, they are in discussion with almost every former Finance Minister available so that they can share their experiences

"One of the idea in their mind is instead of a figure, can it be a range so that we don't bind ourselves so tight that we have some element of flexibility," he added.

The panel has been given 4 months time, he said, adding, "if only extensions are not needed and I hope as and when the report comes, we will put them on public domain for discussion so that this can impact on policy as far as future is concerned."

B B Patil (TRS) said adequate infrastructure needs to created to deal with issues like floods and price rise.

Demanding special status for Andhra Pradesh, B V Subba Reddy (Congress) said the government has yet to fulfill its commitment.

"It is a genuine case to grant the special status. I request the government to fulfill its commitment immediately without further delay," he said.

Criticising the UPA regime, Nishikant Dubey (BJP) said this government has taken several steps to boost the growth of the economy.

During UPA's time, he said the situation of taxation regime was very bad as 15-20 lakh crore tax was under dispute in courts and tribunals.

Attacking government, Jay Prakash Narayan Yadav (RJD) said several schemes have been announced but the implementation is not there.

Nothing is happening for poor and marginalised section of people, he said adding the government has announced special package for Bihar but "we have not received any money".

He also said that either the government should end the MPLAD fund or it should be increased for its proper utilisation.

(PTI)


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