Finance Minister Nirmala Sitharaman said on Tuesday that the economy was showing signs of coming out of a deep slowdown and that “green shoots” were visible in some sectors.
In replies to the Budget discussion in the Lok Sabha and the Rajya Sabha, Sitharaman also said the Modi government would not repeat the “mistakes” of the Manmohan Singh regime in the aftermath of the 2008-09 slowdown.
“There are seven important indicators which show that there are green shoots in the economy,” she said in the Lok Sabha. In both the Houses, first in the Lok Sabha and then in the Rajya Sabha, she listed these indicators.
She said foreign direct investment (FDI) stood at $24.4 billion at the end of November 2019, as against $21.1 billion the year before. Foreign portfolio investment inflows stood at $12.6 billion for April-November 2019-20, compared with an outflow of $8.7 billion for the same period of the previous fiscal year, she said. The minister said Rs 22,000 crore had already been allocated to the National Investment and Infrastructure Fund for investing in projects identified under the Rs 1.3 trillion National Infrastructure Pipeline. She said that the index of industrial production, purchasing managers indices on manufacturing and services, forex reserves, and tax collections had all indicated an economic recovery.
“Gross goods and service tax revenue collections in January was Rs 1.10 trillion. Gross GST revenue has surpassed the Rs 1 trillion mark more than six times in FY20,” Sitharaman said. She said the government's focus was on four engines of growth which included private investment, exports, private, and public consumption.
On exports, Sitharaman said the government had taken several steps to boost the sector, including a tax refund scheme and enhanced credit to exporters.
She said the Remission of Duties or Taxes on Export Product (RoDTEP) scheme would replace the existing Merchandise from India Scheme (MEIS), which is considered as non-compliant to global trade rules.
"In effect, RoDTEP will more than adequately incentivise exporters than the existing schemes all put together," Sitharaman said in the Lok Sabha. "I am making it plain that RoDTEP, which is now coming in, will more than adequately compensate and incentivise exporters than all the existing schemes put together," she added.
The finance minister also said that in order to boost credit to export sectors, the RBI had enhanced the sanctioned limit to the eligible under priority lending norms. "The limit has been raised from Rs 25 crore to Rs 40 crore per borrower. Furthermore, the existing criterion of units having a turnover of up to Rs 100 crore has been totally removed. So, it is applicable to anybody who wants to approach and take this priority sector lending," she said.
She informed that the government had also amended SEZ law under which trusts were allowed to set up units in special economic zones. The country's exports contracted for a fifth month in a row by 1.8 per cent in December 2019 to $27.36 billion. During April-December 2019-20, exports slipped 1.96 per cent to $239.29 billion, imports declined 8.9 per cent to $357.39 billion, leaving a trade deficit of $118.10 billion.
Responding to criticism on the Budget by the Opposition benches, the finance minister said: “We are not predisposed to repeating the UPA’s mistakes from 2008-09 slowdown.”
In both the Houses, she directly addressed a statement by former Finance Minister P Chidambaram who had said that "the economy was perilously close to collapse and was being attended by incompetent doctors.”
She said the twin balance sheet problem, high level of toxic assets, unsustainable fiscal deficit levels and double-digit inflation were all legacy of the UPA, when ‘it was managed by competent doctors,’ she remarked sarcastically.