News Mania Desk / Piyal Chatterjee / 16th December 2024
Opposition members raised concerns on Monday about the low economic growth rate of 5.4% in the second quarter of the current fiscal year and asked the Finance Minister what efforts the government is doing to promote growth, reduce inflation, and create employment. Participating in the discussion on Supplementary Demands for Grants in the Lok Sabha, TMC member Sougata Ray stated that the government is stuck in a “pincer movement” between pushing growth and controlling inflation, and that the economy is not in “fair shape.”He further claimed that previous RBI Governor Shaktikanta Das was forced to quit the Reserve Bank because he did not comply with Finance Minister Nirmala Sitharaman’s request to lower interest rates. Instead, Das chose to concentrate on reducing inflation.
“There is a typical crisis in the economy. The crisis is our growth projection for Q2 slipped to 5.4 per cent. This is very damaging to the economy and there is a sharp slowdown in the manufacturing sector,” Ray said. “There was a dispute between the Finance Minister and RBI Governor. The Reserve Bank wanted to keep repo rate stable, whereas the finance minister was pushing it for reducing it so that more money could go to the economy. Ultimately, the Reserve Bank Governor had to leave,” Ray said.
The government is seeking Lok Sabha approval for an extra net expenditure of Rs 44,143 crore in the current fiscal year through the first batch of Supplementary Demands for Grants, owing mostly to increased spending by the agricultural, fertilizer, and military Ministries.Ray stated that this supplemental demand will increase the budget deficit above the objective of 4.9% for the current fiscal year, and the only way to cope with it is to lower infrastructure investment.
“To sustain higher growth you need more private investment. To have more private investment, you have to spend more on infrastructure. If you spend more on infrastructure, inflation will go up. So there is a double whammy that the government is caught in,” Ray said.
Ray said he does not see anyone capable in the NDA government to deal with the problems facing the Indian economy. “It would have needed Manmohan Singh to tackle this problem… This government is hamstrung by lack of policies.” “Earlier I had commented on her (Sitharaman) not having a foreign degree. I’m withdrawing that comment but it would have been good if the finance minister had been a PhD in economics even from an Indian university. She will be able to tackle the problem in which the Indian economy is caught — growth or control of inflation,” he added.
Supriya Sule (NCP-SP) asked the Finance Minister what actions the government is doing, particularly in terms of job creation, inflation, and strengthening domestic consumption, as well as how to address the “alarming” 5.4% GDP growth in the second quarter. She asked the government to take efforts to promote exports, which had been falling in recent months. Sule wanted to know what the government was doing to fix the tax problem with Switzerland. The European nation removed India’s most favoured nation (MFN) designation last week, resulting in a higher tax rate on revenue and dividends produced by any Indian firm in that country.
