A slowing of growth is not recession, says Nirmala Sitharaman
28 November 2019
India’s economy might have slowed, but there is no recession in the country, finance minister Nirmala Sitharaman told the Rajya Sabha on Wednesday.
While refuting opposition charge that the economy is “slipping into recession,” Sitharaman, however, admitted that growth “may have come down”.
“Economic growth may have slowed down, but there is no recession,” she said, adding that indicators such as foreign exchange reserves, domestic supply, consumption and management of inflation are much better than it were during the UPA regime.
“FDI inflows in 2009-14 were $189.5 billion and they were $283.9 billion under BJP rule in the following five years. The foreign exchange reserves rose to $412.6 billion from $304.2 billion in UPA-II,” she said.
The finance minister said recognition of the problems, recapitalisation, resolution of the problems and reforms have helped the banking sector. Measures such as merger of banks were part of the banking reforms, she said.
Revenue expenditure, capital expenditure and capital receipts have also increased, she said. “It is not at all right to say that everything has come down,” Sitharaman added.
Initiating the debate, former commerce minister and senior Congress leader Anand Sharma said the country is facing a “deepening economic crisis which is India specific.” He also said the gap between the rich and the poor is widening at a frightening pace.
“The situation, which we are witnessing today, cannot be called a slowdown or merely a recession. It can no more be explained away as cyclical, structural or linked to the global developments,” he claimed.
“We expect the government to take action to spur growth but their own capital expenditure has come down... Private sector is investing, government is not spending as there is no money. All this has impacted the trust of the common man in the country’s economic system,” he added.
BJP member Ashwini Vaishnaw said the slowdown was cyclical in nature. “It is not a structural thing. It is likely to bottom out by March and it would be followed by a solid growth,” he argued. He said that the way to build the country is to put the money in investment rather than putting money in consumption.
“Investment of Rs10,00,000 crore per year is the target that we have taken and that is the direction in which we are moving,” he said.
Trinamool leader Derek O’Brien quizzed the BJP over its trust quotient.
“What is your trust quotient with the states? Are you compensating the states enough for GST? Rs8,000-9,000 crore have not been paid to Punjab, Kerala, Rajasthan, Delhi and Bengal. To Bengal, it is about Rs3,500 crore.
“Every state can give various examples of how you have lost the trust quotient. Can the youth of this country trust you? If all these people don’t trust you, industry overall will not trust you. Jobs have been lost. In the textile sector, it is three crore; in casual farm labour, it is three crore; in the mining sector, it is 13 lakh, in the auto sector, it is 10 lakh, he claimed.
After the four-hour-long discussion on the state of economy, the opposition walked out of the House stating that the finance minister, in her reply, ignored concerns raised by them.