New Delhi: Opposition members on Monday flagged the low economic growth rate of 5.4 per cent in the second quarter of current fiscal and sought to know from the Finance Minister what steps the government is taking to boost growth, control inflation and create jobs.
Participating in the debate on Supplementary Demands for Grants in the Lok Sabha, TMC member Sougata Ray said the government is caught in “pincer movement” of whether to push growth or control inflation and the economy is not in a “fair shape”.
“There is a typical crisis in the economy. The crisis is our growth projection for Q2 slipped to 5.4 per cent. This is very damaging to the economy and there is a sharp slowdown in the manufacturing sector,” Ray said.
He also alleged that former RBI Governor Shaktikanta Das had to leave the Reserve Bank because he did not heed to the demand of Finance Minister Nirmala Sitharaman to cut interest rate. Instead, Das decided to focus on containing inflation.
“There was a dispute between the Finance Minister and RBI Governor. The Reserve Bank wanted to keep repo rate stable, whereas the finance minister was pushing it for reducing it so that more money could go to the economy. Ultimately, the Reserve Bank Governor had to leave,” Ray said.
Through the first batch of Supplementary Demands for Grants, the government is seeking Lok Sabha’s nod for additional net expenditure of Rs 44,143 crore in the current fiscal, mainly on account of higher spending by agriculture, fertiliser and defence ministries.
Ray said this supplementary demand will push up the fiscal deficit from the target of 4.9 per cent for current fiscal and the only way to deal with it would be to reduce spending on infrastructure.
“To sustain higher growth you need more private investment. To have more private investment, you have to spend more on infrastructure. If you spend more on infrastructure, inflation will go up. So there is a double whammy that the government is caught in,” Ray said.
Ray said he does not see anyone capable in the NDA government to deal with the problems facing the Indian economy. “It would have needed Manmohan Singh to tackle this problem… This government is hamstrung by lack of policies.”
“Earlier I had commented on her (Sitharaman) not having a foreign degree. I’m withdrawing that comment but it would have been good if the finance minister had been a PhD in economics even from an Indian university. She will be able to tackle the problem in which the Indian economy is caught — growth or control of inflation,” he added.
Supriya Sule (NCP-SP) sought to know from the Finance Minister what steps the government is taking, especially with regard to job creation, inflation and increasing domestic consumption, and also to tackle the “alarming” 5.4 per cent GDP growth in the second quarter.
She urged the government to take steps to boost exports that have been declining in recent months.
Sule wanted to know what the government is doing to resolve the taxation issue with Switzerland. The European nation, last week, withdrew the most favoured nation (MFN) status accorded to India following which income and dividend earned by any Indian entity in that country would attract a higher tax rate.
Manish Tewari (Congress) said the economy is running on the back of government capital expenditure.
Citing data, he said all economic parameters have declined in the Modi regime, compared to the UPA regime.
