Big challenge to reverse cycle of high inflation, low growth: Jaitley

16 August 2014

Finance Minister Arun JaitleyFinance Minister Arun Jaitley today said the current combination of high inflation and low growth is intolerable and the ratio urgently needed to be inversed.

"If inflation is high then you begin at a point where growth is low. We need to change this situation. And I believe that unless we find out the reasons which have led us to such a situation, it is difficult to solve it," he said.

Jaitley was speaking at a Bharatiya Janata Party forum meeting in Mumbai on his second official visit in the nation's financial capital after becoming the union finance minister.

He echoed his party's view in attributing the current predicament to policy paralysis and populist measures of the previous UPA government.

"Some of the populist schemes like free medicines in Rajasthan did not help the then ruling party to come back to power," the finance minister quipped.

He said the Narendra Modi government inherited very low growth - GDP grew at 4.5 per cent and 4.7 per cent respectively in 2012-13 and 2013-14.

"The manufacturing sector for one year was flat and another year it was negative. When manufacturing growth becomes negative, the Customs & Excise duties come down, and government revenue also comes down, forcing it to borrow more," he said.

Jaitley, who apart from finance continues to hold the defence portfolio, said one of the biggest challenges for the nation is to remove poverty and to increase the pace of development.

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