GDP growth in FY24 seen at 8% or more on average, says Sitharaman

Speaking at an event organised by the Mint newspaper, Sitharaman said the country has seen macroeconomic stability with the first three quarters of the current fiscal having registered GDP growth of above 8%. The economy expanded by 8.2% in Q1; 8.1% in Q2; and 8.4% in Q3.

“Hopefully, the fourth quarter which ends tomorrow (March 31) will also have it (growth) in the range of 8 per cent or above 8 per cent, resulting in 2023-24 having an average GDP growth of 8 per cent or over 8 per cent, is what my expectation is,” she said.

“We can’t grow at 8 per cent without consumption happening,” she said, referring to comments made by experts on tepid consumption conditions.

Sitharaman said inflation management in the country is far better now as compared to the years before 2014 when it was in the double-digit.

“We are playing in tandem with the RBI in making sure inflation is well within the tolerance band. Food inflation, particularly, is being contained. Seasonal shortages in food do spike up inflation, but that is also under control because there is a group of ministers who are looking at it,” she said.

In February, the CPI or retail inflation stayed flat at 5.09% against 5.1% in January.

The Finance Minister said the banking sector’s health has improved with banks now providing rich dividends to the government. Banks’ non-performing assets (NPA) levels are coming down and they will come down in the next few months, she said.

A recent report by Care Ratings has projected gross NPAs of banks to be at 2.5-2.7% in FY24, and improve to 2.1-2.4% by the end of FY25.

Sitharaman said public sector banks are now being nudged to be a lot more professional in handling their affairs. These lenders are able to go to the market, raise money for developmental activities and are no longer looking at the government to infuse capital every year.

“With the banking sector revving to perform and particularly the scheduled commercial banks going back to doing their core business of lending and receiving deposits, and not getting into long-term high-risk investments… banks can get back to making sure that short and medium credits are the ones they are focusing on rather than looking at high long-term credit lending,” she said.

Sitharaman also said the tax notices are being sent by the Income Tax Department under the Central Board of Direct Taxes (CBDT) because of the approaching time-barring deadline for assessment years on March 31. Cases are not being opened beyond six years unless the amount involved is substantial or some search or some seizure somewhere has given reason to think that this particular account has to be opened, she said.

“…many notices which are being sent now are because they have to start honouring that six-year time limitation. And the last assessment year, which comes into the six-year limitation, beyond which they can’t open up. This 31st March is when the time bar is imposed on the tax authorities themselves, meaning they can’t open it up on 1st April…” said Sitharaman.

Asked about market regulator SEBI’s caution over the build-up of “froth” in certain parts of the market and the Reserve Bank of India Governor flagging concerns on unsecured lending, Sitharaman said these are regulatory matters and she would not like to comment on that.

She, however, emphasised that Indian markets, even during times of great volatility outside, have held their own.
“I think Indian markets have been a lot more saner. The problem of over valuation…is it short duration…is it froth…is it a bubble, all that debate can go on, and silently, I am sure, the regulators will handle it,” she said.