22 September, Mumbai
Union Finance Minister Arun Jaitley on Friday said the government was working towards getting back the earlier growth rate numbers of the country and was fully prepared for a “responsive action”.
Jaitley’s clarification came amid reports of the government planning a financial stimulus to give a boost to the economy as the GDP numbers in the first quarter dipped to a low of 5.7 per cent.
“How do you maintain balance — support banks and at the same time maintain best standards of fiscal prudence. The last part is the current challenge we are facing. It seems the logical course to get back (to the earlier growth rate),” Jaitley said here at the Bloomberg India Economic Forum.
“Lare number of structural reforms have been taken in a year, but we have to make sure that capital does come and also maintain best standards of fiscal prudence. That is the balance we have to maintain. But there is no need to panic. But responsive action is needed and we are fully prepared for it,” he said.
Jaitley said that there is need for fiscal prudence in the economy as the real answer lies in finding balance between structural reforms and growth.
“India and the world must be rest assured that government in India is conscious of this. So that the position we have gathered as the fastest growing economy for three years, we should be able to retain that. That is the level of aspiration we have,” he said.
On being asked if the current economic situation in the country was a challenge, he said that there was no easy day in the management of the economy as every day was a challenge.
“Everyday is a challenge. There is no easy day in the management of economy. But we have learnt to live in an active democracy because the luxury which the commentators have, we don’t have that privilege. We have to decide which way to go.
“If you don’t decide, the challenges arise then. You take your time to decide, but eventually decisions have to be taken. There are multiple challenges, there are some which can be immediately addressed and some are because of external factors,” he added.
On the challenge of addressing banking stress, he said that the government was at an advanced stage of consolidating and strengthening the public sector banks.
“We are at an advanced stage of our strategy. We are looking at both consolidating and strengthening banks. The object of consolidation is creating stronger banks. I can’t put a timeline though,” he said.
He said that when the issue of non-performing assets (NPAs) or bad loans started rising, banks were given various enabling tools, which worked only marginally.
With the Reserve Bank of India taking up top bad loan accounts for resolution, he said its success would be determined if the timelines were maintained.
“The crisis of the (bad) accounts can’t be allowed to persist indefinitely,” he said.
On the roll-out of Goods and Services Tax (GST), Jaitley said he was keeping his fingers crossed as “a huge chaos” was expected on the technical side but added that the implementation has been much smoother.
“I was keeping my fingers crossed. I was pleasantly surprised by the smooth rollout. Industry has taken to it. The returns have shot up. I was expecting major technical glitches. Any system can get glitches.
“This (GST) system has capacity of one lakh returns per hour, but if 50 lakh people wait for the last day, it is a problem that assessees are inviting on themselves. System can easily take 24 lakh returns per day,” he said.
On the working capital blockage issue being faced by exporters under GST, he said that the government was “seriously looking into it”.
“First two months may not be sufficient indication though. There are still lot of things that can be done to improve the export competitiveness of India,” he added.