Days after he resumed charge as Union Minister of Finance and Corporate Affairs, senior BJP leader Arun Jaitley on Sunday took a jibe at the former UPA government, saying that the economy had undergone a transformation ever since the NDA came to power in 2014.
While referring to the latest report released by the International Monetary Fund (IMF), Jaitley said that a comparison of the data released in 2014 and 2018 proved that high inflation, fiscal deficit and current account deficit, besides a standstill infrastructure, power sector and allocation of natural resources were some of the failures of the previous government.
Taking to both Twitter and Facebook, the minister summarised the IMF report to bring out the differences in the economy between January – February in 2014 and July – August 2018.
“We have come a long way. The last four years have seen a series of reforms, both legislative and otherwise, which have been carried at by the Government. The system have been substantially cleaned up and made more transparent,” Jaitley tweeted.
We have come a long way. The last four years have seen a series of reforms, both legislative and otherwise, which have been carried at by the Government. The system have been substantially cleaned up and made more transparent.
— Arun Jaitley (@arunjaitley) August 26, 2018
“In last 4 years, decisiveness has led to easier decision making and made the economy stand out amongst several other countries. I would urge all to read these two IMF reports, the copy of which are now publically available, any reasonable person will concur with what I have said,” he added.
Highlighting the differences, Jaitley said in 2014, as mentioned in the report, “the tightening of global liquidity has increased external pressures and heightened the focus on India’s macroeconomic imbalances (high inflation, large current account and fiscal deficits) and structural weaknesses (particularly supply bottlenecks in infrastructure, power and mining)”.
“Growth is expected to slow to 4.6 percent this fiscal year, the lowest level in a decade, reflecting global developments and domestic supply constraints. Headline CPI inflation is expected to remain near double digits for the remainder of the fiscal year. The current account deficit is narrowing, driven by a significant improvement in exports, robust remittances flows, and a rapid diminution of gold imports. Nonetheless, India has very little room to adopt countercyclical policies, constrained by persistently-high inflation, and sizeable fiscal and external imbalances. Spillovers from renewed external pressures interacting with domestic vulnerabilities are the principal risks,” he added, referring to the report.
On the other hand, in 2018, he said, the report stated that “stability-oriented macroeconomic policies and progress on structural reforms continue to bear fruit. Following disruptions related to the November 2016 currency exchange initiative and the July 2017 goods and service tax (GST) rollout, growth slowed to 6.7 percent in FY2017/18, but a recovery is underway led by an investment pickup”.
It added, “Headline inflation averaged 3.6 percent in FY2017/18, a 17-year low, reflecting low food prices on a return to normal monsoon rainfall, agriculture sector reforms, subdued domestic demand, and currency appreciation. With demand recovering and rising oil prices, medium-term headline inflation has risen to 4.9 percent in May 2018, above the mid-point of the Reserve Bank of India (RBI)’s headline inflation target band of 4 percent ± 2 percent. External vulnerabilities remain contained but have risen. The current account deficit (CAD) widened to 1.9 percent of GDP in FY2017/18, on rising imports and oil prices. Gross international reserves rose to US$424.5 billion (about 8 months of prospective imports of goods and services) at the end of March 2018, but declined to US$407.8 billion in the third week of June 2018.”
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