Growth slow, no chance of recession though: FM

NEWDELHI: Finance minister Nirmala Sitharaman acknowledged on Wednesday that growth had slowed, but ruled out the risk of the economy ever slipping into a recession, in a discussion on the state of the economy that prompted some unconvinced Opposition members to stage a noisy walkout from the Rajya Sabha.

“If you are looking at the economy with a discerning view, you see that growth may have come down but it is not a recession yet; it will not be a recession ever,” Sitharaman said in her reply to the debate.

Gross domestic product (GDP) growth accelerated from 6.4% at the end of 2009-2014 to 7.5% in 2014-2019, Sitharaman said, comparing growth in the first term of the Bharatiya Janata Party (BJP)-led National Democratic Alliance (NDA) government and the second term of its predecessor, the Congress-led United Progressive Alliance (UPA).

Foreign direct investment (FDI) inflows from 2014-2019 rose to $283.9 billion under the NDA from $189.5 billion in the same period, And foreign exchange reserves rose to $412.6 billion from $304.2 billion.

Measures taken to boost economic growth are bearing fruit, Sitharaman said, adding that the slowdown was a cyclical phenomenon that would bottom out by March, in response to opposition members who warned that the economy was heading towards a crisis.

Economic growth slipped to 5% in the three months ended June, the slowest pace in 25 quarters, and the fifth consecutive quarter that it decelerated, as households cut spending. Earlier this month, rating agency Moody’s Investors Service cut India’s economic growth forecast for the current year to 5.6% from the previous estimate of 5.8%, saying the slowdown was lasting longer than had been previously expected.

The government has responded to the slowdown with corporate tax cuts entailing a sacrifice of ₹1.45 lakh crore.