No recession yet: Finance Minister

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Finance Minister Nirmala Sitharaman told the Rajya Sabha on Wednesday that though economic growth had slowed, the economy was not in a recession yet and may not ever be. The government, she said, was aware of the situation and had taken sector-specific decisions to alleviate the distress.

“If you look at the economy with a discerning eye, you see that growth may have come down… but it is not a recession yet and won’t be a recession ever,” Ms Sitharaman said while giving her reply during the short duration discussion on the economic slowdown.

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The Congress, Trinamool Congress and Left MPs walked out while Ms. Sitharaman was speaking, saying she was repeating what she had said in her Budget speech in July, rather than answering questions raised by MPs during the discussion.

The Minister said while she had patiently heard 23 MPs speak during the discussion, the Opposition MPs would not hear her reply.

She went on to cite statistics to show that almost all key macroeconomic indicators, such as headline inflation, core inflation, food inflation, foreign direct investment, foreign exchange reserves, and the government’s liability ratios were in a better position at the end of NDA-I’s term as compared to the end of UPA-II’s term.

Ms Sitharaman said GDP growth accelerated from 7.4% in 2014-15 to 8% in 2015-16 and 8.2% in 2016-17. It was only at this point that the delayed impact of the ‘twin balance sheet problem’ of stressed balance sheets of corporates and banks began to show itself and, as a result, investments also began to slow.

“Even for the first quarter of 2019-20, clearly the decline is very pronounced, and we are aware of it,” she said. “But it has not come out of nowhere, there is a trail.”

On the Goods and Services Tax, the Finance Minister said various rate cuts implemented by the GST Council were to benefit consumers and to spur manufacturing growth.