NEW DELHI: Finance minister Arun Jaitley strongly defended the government’s economic management, demonetisation and tax reforms, citing robust revenue collections to dismiss what he described as the “so-called” slowdown.
Speaking at a book launch, a day after former finance minister Yashwant Sinha’s criticism of his economic management, Jaitley said the government was not scared of taking tough decisions, even as he tore into the record of predecessors in North Block.
“India has shown bold leadership… our leadership doesn’t shiver in taking decisions,” Jaitley said, defending demonetisation and the implementation of the goods and services tax (GST), while flagging the insolvency code, benami law and crackdown on black money as some of the significant steps.
“Acting in tandem will not change the facts,” Jaitley said, referring to criticism by Sinha and former finance minister P Chidambaram, while recalling their record. The government’s economic management has been subjected to criticism after GDP growth fell to a three-year low of 5.7 per cent in the June quarter.
Jaitley cited strong direct tax and indirect tax numbers to argue against what’s being described by some as a structural slowdown and not a temporary disruption due to demonetisation and GST rollout.
“I at least never imagined that the states will reach the breakeven point in the first two-three months itself,” Jaitley said, referring to GST revenue, while adding that some teething problems were inevitable.
The likelihood of revenues reaching the anticipated figure in the initial months hadn’t been expected and these are likely to rise further in the next few months, he said, before citing a strong 15.7 per cent rise in direct taxes so far.
GST collections have topped Rs 90,000 crore both in July and August. “So this so-called slowdown that some visualised hasn’t impacted that,” he said. The government was making incremental changes to the economy and had managed to break the policy logjam under the previous government.
“Small areas which were paralysed, at least under UPA2, because of discretion being used and misused, we were completely able to distance ourselves from this,” he said.
Jaitley said when the government took over, the first 17 highway contracts did not attract a single bidder, but today India is back to creating more than 20 km a day.
“We not only opened up several sectors, we made the entry smoother… India attracted highest level of FDI (foreign direct investment) year after year,” he said, citing strong overseas inflows. He said demonetisation had created a new normal, defending the note ban.
“Prime Minister Narendra Modi had a very strong agenda on creating a new normal as far as the India shadow economy was concerned,” he said. Demonetisation was aimed at cracking down on black money.
Jaitley said the government is trying to balance the need to accelerate the pace of growth and taking care of the needs of the poor.
“So, getting cross-sections on the government’s side and arousing a new confidence in them has been the basic tenor of this government in the past three and a half years,” he said.
On the issue of prices, the finance minister noted that the government had inherited inflation of 9-10 per cent and had brought it down to a respectable level.
“For them (opposition), 3.36 per cent is also inflation. Of course, system needs inflation otherwise the economy will go into a recession,” he said.
The finance minister noted that the government had narrowed the fiscal deficit, current account deficit and maintained the rupee at the appropriate value.
Jaitley said the government is finalising the electoral bonds scheme, a move aimed at cleaning up political funding.
“I have already announced this year and I am keen to implement it. It is in the final stages. How do we legitimise political funding in India so that the underground funding itself comes to an end and an alternate mechanism sets in?” he said.