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Finance Minister Arun Jaitley said on Sunday that India could surpass the target of eighth per cent GDP growth this financial year if legislative and executive decisions were taken properly.
According to Jaitley, the fall in crude oil prices has given a cushion to the government with the current account deficit (CAD) at the lowest in recent times, which helped control inflation. “Our resources are increasing with transfer of resources from oil-producing countries to oil-consuming countries. Taking advantage of that, we are investing in infrastructure, which resulted in improvement in the highway sector. If we factor in the effect of GST (goods and services tax), I think we can surpass our target,” Jaitley said. He was speaking in Kolkata at an event of the Indian Chamber of Commerce.
The minister, though, said it was possible only if "obstructionist politics" was kept at bay. He said the maturity of the Indian political system is being tested to such an extent that a decision which was consensual can be blocked. The monsoon session of Parliament was a washout due to fierce protests from Opposition parties. “I have no doubt that eventually, people will see reason,” he said.
Last week, Moody's Investor Services cut India's growth forecast for this financial year to seven per cent from 7.5 per cent projected earlier, citing below-normal rainfall.
"One main risk to our forecast is the pace of reforms slows significantly as consensus behind the need for reforms weakens once the least controversial aspects of the government's plan have been implemented," Moody's had said.
International Monetary Fund had pegged the growth rate to be at 7.5 per cent. Both the projections are lower than the estimates of the finance ministry and the Reserve Bank of India (RBI). The ministry expects GDP growth to be 8-8.5 per cent, while the RBI has pegged it at 7.6 per cent for 2015-16.
Ruling out any impact of monsoon on the economy, Jaitley said there was only a "slight inadequacy" in rains. He added: "We are expecting a better show in agriculture this year compared to last year."
Cashless economy
Referring to RBI's decision to grant licences to 11 new payments banks, Jaitley said the government was taking significant steps in transforming the country in to a cashless economy. He said with the subsidies now being routed through bank accounts, those which had zero balance are now having cash. Jaitley said: "Fifty per cent of the accounts opened under the Jan Dhan scheme now have cash. We are going to announce some more steps soon, which will discourage the use of cash."
