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Jaitley Rebuts Manmohan Singh's Comments, Says Economy Not Fragile |
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New Delhi: Dismissing former Prime Minister Manmohan Singh's comments on the state of Indian economy, Finance Minister Arun Jaitley today said an economy growing at fastest pace in the world cannot be 'fragile'.
"In a global slowdown situation, to have the fastest growth rate in the world certainly does not make Indian economy fragile," he told reporters here.
Jaitley made these comments when asked about the Singh's statement that recovery in the Indian economy was very fragile.
The Finance Minister said the fourth quarter (January- March) GDP growth of 7.5 per cent and 7.3 per cent for the entire financial year 2014-15 indicate that the economy is in "recovery mode".
The silver lining in the GDP number is the manufacturing sector which registered 8.4 per cent growth in the fourth quarter and 7.1 per cent for entire 2014-15.
"Manufacturing and services indicate that we have a potential to grow at 8-9 per cent and beyond," Jaitley said.
The fourth quarter GDP data "gives us a broad idea of how the Indian economy is moving. It is absolutely clear that the economy is in a recovery mode", he added.
While the fourth quarter GDP growth rate at 7.5 per cent was better than China's 7.4 per cent, making India the fastest growing economy in the world, for the full fiscal it was a tad lower than the Chinese growth rate.
Jaitley further said that with improvement in agriculture and exports, India could achieve 9 per cent growth rate.
Jaitley said the services sector is moving towards a double digit growth rate while there is an upward movement in the manufacturing sector. "Therefore, it holds a good promise for Make in India programme".
There is some improvement in capital formation and revenue collections, he said, adding they indicate that the Indian economy has a potential to realise its own strength.
The minister said 7 per cent plus manufacturing growth sends signals of economic revival.
"In my opinion, the full year growth numbers reflect that the economy is not at its full potential. Manufacturing and services sector indicate that we have a potential to grow at 8-9 per cent and even more than that," Jaitley said.
He added however that agriculture and exports are the weaklings and if they show improvement the overall economic growth will be lot better.
He blamed poor monsoon for lower agriculture growth rate of 0.2 per cent in 2014-15.
The global slowdown, Jaitley said, has had its impact on Indian exports. "If global situation improves, Indian exports will automatically improve," he said, adding that if agriculture and exports improve India will be able to achieve its short term growth target of 9 per cent and beyond.
Commenting on the GDP numbers, Finance Secretary Rajiv Mehrishi said the improvement in manufacturing sector growth shows that jobs are being created.
Chief Economic Advisor Arvind Subramanian said manufacturing and the services sector, which are within the government's control, have done well; while those beyond its control - farm and exports, linked to monsoon and global economy respectively, have not done so well.
"Broadly this is a very encouraging news because directionally there is a substantial improvement in the basic price growth, it is increasing," Subramanian said, adding that 2015-16 will be better than the previous fiscal.
He said the positive impact of last year's slump in global oil prices will be fully realised in 2015-16.
"The real decline in oil prices happened towards the second half of last year and if you compare year-on-year, 2015-16 vs 2014-15, oil prices are going to be about 27-28 per cent lower. So the positive impact is going to be felt in 2015-16," he said.
Subramanian said that the most recent reports on monsoon indicate it would be close to normal.
"I can say with confidence that agriculture growth next year will be higher than this year," Mehrishi said.
Stating that the Indian economy was still recovering, Subramanian said: "We are not an economy that is at its potential."
Source : profit.ndtv.com
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