Wrong to link economic slowdown to noteban, says Arun Jaitley

Asked if it was now clear that demonetisation led to lower growth, Jaitley said: “What you think is very clear is not very clear. So let us not put the question with an erroneous premise.

By: ENS Economic Bureau | New Delhi | Updated: June 2, 2017 1:11 pm
arun jaitley, demonetisation, India GDP, economic growth, india economic growth, india news “There are several factors which can contribute to GDP in a particular quarter. There was some slowdown visible even in the global and the domestic situation prior to demonetisation last year.”

Finance Minister Arun Jaitley on Thursday said it will be “erroneous” to attribute the sharp slowdown in economic growth in the fourth quarter of 2016-17 solely to demonetisation since several factors, including the global situation, pulled down the GDP growth to 6.1 per cent in the January-March quarter.

Resolving non-performing assets (NPAs) in the banking sector and pushing up private consumption were the two major challenges the government faces, Jaitley told a press conference to mark three years of the Modi government. He expressed hope that the proposed Goods and Services Tax (GST) will spur growth in the economy.

Asked if it was now clear that demonetisation led to lower growth, Jaitley said: “What you think is very clear is not very clear. So let us not put the question with an erroneous premise.

There are several factors which can contribute to GDP in a particular quarter. There was some slowdown visible even in the global and the domestic situation prior to demonetisation last year.”

“There was impact of global factors. There could be some impact on one quarter or two quarters of one particular factor (demonetisation) which you mentioned. There is also the impact of… if you look at the growth of some sectors, the 9-10 per cent growth that was normally in services, especially in the financial sector, has come down. The ability of banks itself was in question,” he said.

Data released by Central Statistics Office (CSO) on Wednesday showed that financial, real estate and professional services grew at 2.2 per cent in January-March 2016-17, down from 9.0 per cent in the same quarter the previous year. For the full year, growth for these services reduced to 5.7 per cent from 10.8 per cent a year ago.

“So these are cumulative factors which came into play. But I do believe in the current global situation, a seven-eight per cent growth, which is at the moment the Indian normal, is a fairly reasonable, by global standards very good, (and) by our standards a very reasonable level of growth,” he said. The GST will not have any adverse impact on economic expansion, rather it will push up growth, he added.

Maintaining that high level of NPAs was a key challenge for the government, Jaitley said its resolution is work in progress and some action will be taken within the next few days.

President Pranab Mukherjee last month promulgated an ordinance amending the Banking Regulation Act, 1949 to empower the Reserve Bank of India to resolve the thorny issue of NPAs or bad loans.

“RBI was taking measures under the existing mechanism. We have now taken other steps and there would be visible action taken under the new mechanism in the next few days,” Jaitley said.

On the privatisation of debt-ridden national carrier Air India, Jaitley said Niti Aayog has already given its recommendations to the Civil Aviation Ministry to explore various options. “It is for the Civil Aviation Ministry to explore various options,” he said.

While noting that boosting private investment in the economy is a challenge, the government’s strategic partnership policy in the defence sector will help attract Foreign Direct Investment, said Jaitley, who is also the Union Minister for Defence and Corporate Affairs.

He said unless the opening of the FDI rules is accompanied by some reasonable possibility of getting orders, an investor is not going to set up an establishment in the country. Entry of foreign investors “is linked to the kind of orders they will get and the only entity which can place the orders is the Government of India”.

“There are no two procurers, there is only one and that is why the strategic partner policy now has been brought in as it will supplement the FDI policy,” he said. Whether the strategic partner comes through the FDI route or the investor comes with just a technology tie-up, they would be free to do so, he added.

Recounting the series of reform measures taken in the last three years, Jaitley said the government has “restored the credibility of the economy” with a decisive and corruption-free regime which has the ability to take decisions in a transparent and market-linked manner.

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  1. D
    Dinesh Singh
    Jun 3, 2017 at 1:02 am
    Sure. Slowing economy must be due to Kejriwal. Noteban has nothing to do with it.
    1. P
      Jun 2, 2017 at 11:36 pm
      It is jaitley and the ilk of his kind who are protecting tharoor.tharoor won't be hanged alone .he will carry with him a lot of criminals linked with cricket .
      1. N
        Jun 2, 2017 at 3:30 pm
        Mr Jetley Saheb, The wretched Indians , the dalits and the daily labourers have given their verdict on our economy. some of the top economists of the world have verified the facts and the political pundits like Manmohan Singh and Chidambaram have given their feed back .Now GDP growth is placed where it belongs to.China in its editorials backs the consequences of demotisation.Your command over English language and the legal language reveals more than it hides ,MR Finance Minister.You have to be defensive,playing the argumentative Indian,and the defender of faith in Modiji,faithfully sweepting the dirt under your ministerial carpet.Congratulations, our partime finance minister.You are very good at acting ,enacting and re-acting the Modi Drama in our world.Even the meteriologists seem to ape you and your brood.They make false predictions about the weather while farmers commit suicide and water bodies and supplies dry up.He that has eyes see, or close his eyes on Indian realities
        1. P
          Jun 2, 2017 at 2:28 pm
          Win an election first
          1. A
            ASHOK KUMAR
            Jun 2, 2017 at 2:27 pm
            Arun Jaitley, part time Defence Minister and half baked Finance Minister is good for nothing, who even could not win Lok Sabha election from Amritsar and has converted his black money of 700 crores to white during Amnesty Scheme for black money holders.
            1. R
              Jun 2, 2017 at 2:24 pm
              The atmosphere of underlying tension in the country waiting to explode has spooked foreign investments. Who is responsible for foolish statements and giving free rein to lumpen elements in the form of Gau Rakshaks and other vahinis to run amok if not the government?? Along with flight of foreign investments has been the demise of the small scale sector precipitated by the demonitisation of the currency. This GDP result even after tweaking the calculations to show something more favourable. The reality then portra would be even more devastating to note! At some stage someone will bring out a comparison for apples with apples and that figure is going to be shocking!
              1. P
                Pais Hilary
                Jun 2, 2017 at 2:18 pm
                Agreed. The slowdown is not due to note ban. The slowdown is due to brain ban.
                1. M
                  Main hoon
                  Jun 2, 2017 at 1:56 pm
                  He expects everyone to gulp his S H I T. Everything wrong with the country is Congress and Manmohans mistake. Agreed. Please leave this country at least where Manmohan's mistake had left us. Only blaming others wont hide the fact the emperor is naked. Seeing the sorry hapless face of Modi when dea with Putin shows us where we have come to. China is giving us the pittance of SCO membership along with stan,..Shows our worth.. Atleast Manmohan had maintained India's dignity.. By trying to lick USA we exposed ourselves.. now we have to beg China and Russia
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