Manmohan Singh’s claim false, economy is already picking up

NEWDELHI: Backing the demonetisation move, union minister for power Piyush Goyal rejects the claim of former Prime Minister Manmohan Singh, also a noted economist, that the note ban will contract India’s GDP by 2%. In an interview with HT, Goyal, who also holds the portfolio of coal, mines, and renewable energy, says with industry and agriculture sectors picking up, the economy was recovering.

Do you think the costs of demonetisation to the common man is outweighing its benefits?

Now the people are facing much less inconvenience as compared to before. We are encouraging them to use less cash. One of our implicit objectives was to encourage the people to work more honestly. The dishonest can no longer continue to game the system.

People just need to be a little patient. As the Prime Minister said, things would settle down in around 50 days. Moreover, the finance minister has categorically said there will be short-term pain for a quarter or so. But this is an estimate, it could even take less time.

For instance, the cement industry that saw a two-week dip in activity is nearly back to normal. Moreover, the rabi sowing has been 8.5% higher than last year. So, I think people have adjusted well and supported Modi.

Fitch Ratings has already lowered India’s GDP outlook, are you worried?

This is a short-term downgrade, and it doesn’t bother us. Whenever you take bold and disruptive decisions, people need time to adjust.

Manmohan Singh said the GDP will contract by 2%. Do you think he was speaking as a leader of Opposition or an economist?

It’s sad that the Congress, which is struggling to stay relevant as a political party, had to bring the former Prime Minister to make such unwarranted and baseless comments. I wish he elaborates on how he calculated this 2% fall in the GDP. I’m no economist, but I think moving from an informal channel to a formal one will only add to the GDP.

Solar tariff has fallen to an alltime low of ₹3 unit. Do you think such low prices are sustainable?

Though I haven’t factored in the ₹3 one-off transaction, I don’t think it is a viable price.

When the ₹4.6 tariff per unit was discovered, a lot of people criticised it. But my calculations showed it was viable.

I think the solar tariff has been reduced by 45% in the last two years because of efficient economies of scale and transparent bidding. There are no underhand dealings that cause the tariff to go up.

Keeping in mind that 70% of these projects will be debtfinanced, are you worried that the banks will be under stress if any of these fail?

All these projects are backed by power-purchase agreements for 25 years. Moreover, no one can take away the sun and wind. So, there is no risk of prices escalating.

Your focus has been on solar power, but what about hydropower? When do we see a hydro policy?

Over the last few decades, hydropower has taken a hit. At one point, it was the main source of power. This is because people don’t understand the sector fully. We need to address local issues such as land acquisition.

I am working closely with the sector to try and revive small and large hydro projects. We want to focus on the stalled projects, because no one will invest in a sector that continues to have stressed assets.