New Delhi: The government will take immediate steps to arrest the slowdown in economic growth and encourage manufacturing, finance minister Nirmala Sitharaman said in a written reply to questions by lawmakers on Tuesday, just days before she presents the Union budget.
Sitharaman’s statement indicates the National Democratic Alliance government is likely to announce measures to boost business confidence and attract private investments that the economy needs to accelerate growth in the budget to be presented on Friday. She may also offer incentives that will encourage job creation, especially in labour-oriented sectors such as textiles and real estate.
The Modi administration, which had drawn criticism in its previous term for disruptions in economic activity caused by the 2016 currency ban and the initial glitches in the roll-out of the goods and services tax, is consulting economists and chief ministers before drawing up a road map for economic reforms for the next five years.
“Economic growth is high on the agenda of the government. Various reforms are being undertaken by the government in many spheres to improve GDP growth... Further, to give focused attention to issues of growth, government has constituted a five-member cabinet committee on investment and growth chaired by the Prime Minister," Sitharaman said in her written reply to a question in the Rajya Sabha.
Sitharaman said the moderation in economic growth momentum in FY19 was primarily on account of slower growth in the farm and allied sectors.
She, however, denied that demonetization has had any harmful effect on the Indian economy. Growth in the manufacturing sector has slowed, but it is not attributable to demonetization, news agency PTI said, citing Sitharaman.
India’s economy expanded at 5.8% in the March quarter, its slowest pace in nearly five years, according to data from the statistics ministry.
The minister said the economy was still growing faster than the US and China.
In response to another question on the economy, the minister said the aim was to create a conducive environment for the manufacturing sector by streamlining regulations and processes.
India’s businesses are hoping for a cut in the corporate tax rate from the budget and expect banks to pass on the reduction in the Reserve Bank of India’s benchmark policy rates.
They are also hoping for easier land and labour policies.
According to the latest government data, India’s factory output picked up in April to hit a six-month high.
Data released by the National Statistical Office on 12 June showed the index of industrial production expanded at 3.4% in April from 0.3% a month ago.
Sitharaman also said in response to another question that state-run banks had classified ₹1.5 trillion worth of loans as “wilful defaults" in FY19, with the biggest lender, State Bank of India (SBI), accounting for nearly a third of the amount.
SBI recorded wilful defaults worth ₹46,158 crore, while Punjab National Bank reported ₹25,090 crore and Bank of India ₹9,890 crore, Sitharaman said in her reply, Reuters reported.