The
two great reforms by the Modi government despite having numerous benefits to
the economy have been criticized by some people in the opposition. The
temporary slowdown in the economic growth has given some cause of worry. However,
on 24th October, Finance Minister, Shri Arun Jatliey, reassured the
people of the country that the economy is recovering fast. The government
presented the facts where economy is progressing along with the necessary steps
taken by it to sustain growth momentum.
India grew at a
strong pace of 7.5% p.a. in last three years during 2014-17, with growth
exceeding 8% in 2015-16. There was a temporary slippage in growth in the last
two quarters but that slowdown is now over, with all indicators like –IIP
numbers, healthy growth in 8 core sectors (coal, crude oil, natural gas, refinery products, fertilizers, steel,
cement and electricity) ,better performance in market Index, growth
in automobile industry , higher consumer spending etc. all of which are pointing
towards a strong growth pick up.
Finance
Minister said that the public sector banks have adequate lending capacity
after demonetization. Indiscriminate lending under UPA regime had led to accumulation
of non-performing assets and is now under control. Inflation declined from nearly double digits in 2012-13 and 2013-14 to
an average of less than 5 per cent. It has consistently come down (3.28%) and
will not cross 4 per cent this fiscal, according to Economic Affairs Secretary
S C Garg.
The current account deficit (CAD) for 2015-16 was
1.1 per cent of GDP as compared to 1.3 per cent of GDP in 2014-15. The CAD
further narrowed to 0.7 per cent of GDP in 2016-17 on the back of the
contraction in the trade deficit that narrowed to US$ 112.4 billion in 2016-17 from
US$ 130.1 billion in 2015-16. Though exports declined in 2015-16 primarily on
account of the sluggish global demand but on the other hand, imports have also declined
due to fall in international crude oil prices as well as in the prices of other
commodities. During 2016-17, exports grew by healthy 5.2 per cent while imports
increased by 0.9 per cent only, helping in narrowing the trade deficit.
Foreign exchange reserves stood at US$ 370 billion
at the end of March 2017 as compared to 360.2 billion as at end March, 2016. As
on 13th October 2017 the foreign exchange reserves exceeded US$ 400 billion.
With increase in reserves in the last couple of years, most reserve-based
external sector vulnerability indicators have improved
The gross FDI flows to India in 2016-17 amounted to
US$ 60.2 billion, as compared to US$ 55.6 billion in 2015-16 and US$ 45.1 billion
in 2014-15, indicating sustained improvement in global confidence in Indian
economy. During April-August 2017, the gross FDI inflow was US$ 30.4 billion,
higher as compared to the inflow of US$ 23.3 billion in the corresponding
period of the previous year. The government is committed to sticking to the deficit target
of 3.2 per cent of GDP for the current fiscal but added that a review
would be done in December.
The GDP
growth slowdown has bottomed out and the economy is turning around
gradually. Also the International
Monetary Fund had recently projected that the country would achieve 8 per cent
growth rate soon giving positive hopes to the economy. The government is also confident
of surpassing the disinvestment target of Rs 72,500 crore for this fiscal.
Financial
Services Secretary, Shri Rajiv Kumar said an aggressive Rs 2.11 lakh crore
capital infusion for banks for resolution of NPA issue (in March 2017 stood at about Rs7.29 lakh crore, equivalent
to 5% of the country’s GDP) will help banking sector. Out of this, Rs 1.35 lakh
crore will be through the recapitalization bonds-
government instruments subscribed to by
banks, while remaining Rs 76,000 crore from the budgetary support i.e by the
government or by the banks. Micro, Small and Medium Enterprises (MSME) is high
priority area for fund infusion through increased lending. There will be
100 bank-approved project templates along with MSME customized Mudra financing
products. These Cabinet decisions will benefit enhanced market access and
employment. This will be facilitated through a GEM portal and will be connected
to eCommerce portals. There will be special campaign in 50 high
employment clusters.
Finance Secretary Ashok Lavasa made a presentation on
the government's spending on infrastructure to "create more jobs, more
growth," detailing that 83,677 km of highways will be built in the next five
years at a cost of 6.9 lakh crore. "It will create 14 crore man days of
jobs," he said. Also a
road building programme, known as BharatMala, under which 34,800 kms of
roads will be constructed. for which Rs 5,35,000 crore will be invested. Besides,
a 9,000 km economic corridor will also be built , along with inter corridor and
feeder route (6,000km), National Corridors Efficiency Improvement, Border Roads
and International Connectivity (2,000km), Coastal Roads and Port
Connectivity(2,000 km), Greenfield Expressways(800km) and Balance NHDP
works(10,000 km).Prioritizing national security,
the government aims to strengthen border road connectivity. The government also
listed out plans for increasing rural road connectivity and universal
affordable housing. All these measures will surely help the economy to grow at
a fast pace in near future.
Gopal Krishna Agarwal
National Spokesperson of Bjp Economic Affairs
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