NEW DELHI: The slowdown in the second quarter economic growth was a “temporary blip” and the economy will witness healthy growth in the quarters ahead, finance minister Nirmala Sitharaman said on Tuesday and also highlighted govt’s inflation management.
“Quarter 2 of this financial year has been a challenging quarter for India and most of other economies of the world,” said Sitharaman, while replying to the debate on the first batch of Supplementary Demands for Grants in Lok Sabha.
The FM was responding to concerns expressed by several lawmakers over the slowdown in growth and asserted that growth was on track. Growth in the July-Sept quarter of the current fiscal year had slumped to a 7-quarter low of 5.4%, raising worries about the health of the economy and had triggered calls for a cut in interest rates to revive demand.
“In the last three years, India’s GDP growth rate has averaged 8.3%. This is outstanding. This is a number which you can see and compare with the rest of the globe and this number is an outstanding number by global standards,” FM said.
She said that India has been the fastest growing major economy in the world and the credit goes to the people of India – who are struggling and meeting their aspirations, thereby contributing to the economy – and the leadership, which puts policy upfront so that it responds to the people and their aspirations.
The FM also said a generalised slowdown in manufacturing is not expected as it is restricted to few segments. “Out of 23 manufacturing sectors in the index of industrial production, about half of them remain strong even now,” she said, adding that govt’s capital expenditure had grown by 6.4% between July and Oct this year. Govt has budgeted over Rs 11.1 lakh crore for capital expenditure in the current fiscal year.
“I am very optimistic about improved performance going further and going forward,” said Sitharaman.
The FM also said inflation management under NDA has been better than the UPA and detailed historical data to show govt’s record on managing the price situation and asserted govt’s commitment to contain food inflation and pointed to several supply side measures undertaken by govt.
She said retail inflation between April-Oct of the current fiscal year was at 4.8%, which is the lowest since the Covid-19 pandemic, and core inflation, which excludes volatile food and fuel, was at a decadal low of 3.6%.
“We in the Union govt remain committed to better managing food inflation. Volatility in specific food items is weather driven,” she said.
Retail inflation has eased in Nov from a 14-month high in the previous month on the back of moderating food prices, bringing much-needed relief from stubborn price pressures. The data has triggered hopes of a rate cut in Feb when the monetary policy committee meets.
