GDP growth belies claims of rural distress: Jaitley

Finance minister says high rate of agriculture growth has contributed to Q3 GDP

DEMONETISATION

HOPEFUL OF a further pickup in GDP growth, finance minister Arun Jaitley said that a 7 per cent growth in third quarter belies exaggerated claims of demonetisation’s impact on rural economy.

“Demonetisation, admittedly, had led to the squeeze of currency because this was the period during which the replacement of high denomination currencies was taking place and many people were apprehensive to what its impact on overall growth would be,” he said.

But, with a 7 per cent growth in gross domestic product (GDP) the worst fears for the economy have been put behind, Jaitley added.

Demonetisation has helped integration of informal with the formal economy, he said, adding the money that was deposited in the banks is now being spent through a system which is being recorded.

“And I think, the GDP data for Q3 really reflects that position,” he said. “First of all it belies exaggerated claims made by many that the rural sector was heavily in distress.” The Central Statistics Office (CSO) on Tuesday projected a 7.1 per cent growth for the year ending March 31.

High rate of agricultural growth has helped contribute to a rise in overall GDP growth, he said. “Obviously, high rate of agriculture growth has contributed to Q3 GDP. Also, manufacturing increase has contributed to the Q3 GDP and this was already reflected in the VAT data of the states and also the excise data of the Central revenue collection,” he said.

Going ahead, the finance minister said that remonetisation along with resilient Indian economy will help achieve a higher rate of growth in coming quarters.

“With remonetisation at an advanced stage, today money is in the market, demand is also increasing, economic activity is picking up... Economic reforms undertaken by the government will help propel GDP growth in coming quarters,” he added.

Jaitley further said during his recent visit to the UK he held detailed discussions with different groups of investors.

“Now, the UK investors, whom I interacted, are extremely buoyant and positive about India. They see India as a bright spot in today’s global economy and are extremely appreciative of the fact that even in the present global situation, India is one of the few economies which has consistently in one direction been able to bring about reforms and maintain a reasonably higher rate of growth as far as economy is concerned,” he said.

The finance minister said he also had a series of meetings with members of the British government at highest level.

“They are extremely keen, particularly post Brexit, to expand their relationship with India. They have attached very high importance to the relationship with India and they already are major investors in India and they want to expand this and also expand mutual investments in both countries,” he said.