Union Finance Minister Arun Jaitley, speaking at the Hindustan Times Leadership Summit 2018, expressed confidence in the resilience of Indian economy and said the current situation was “short-lived” and won’t last indefinitely.
Jaitley said that the sentiment about the Indian economy is not negative. He added that we can’t be the fastest growing economy for 4-5 years and still have a negative sentiment.
Mr Jaitley while showing concern at the falling rupee against dollar and rising oil prices said that they were related to global reasons and should be considered as a temporary situation.
He said that, “If you leave these two transient situations (oil and dollar), India has consistently acquired 7.5 (+/-) per cent growth rate, and we comfortably achieve that. In today’s global situation, that is the highest in the world,”
Showing confidence in the economy he said, “India’s ability to maintain present growth rate for a decade or two is certain.”
With regard to the widening current account deficit (CAD) Jaitley mentioned, “We are trying our best to take measures narrow it down. Some more steps are likely. But there are two factors, both external: one is the oil prices and the second is the policies within the US which is leading to the hardening of the dollar itself, and therefore affecting other currencies all over the world.”
“But once you have a settling impact, it will find its own level. But what that level is, it has to be decided on the real strength of where the rupee stand and where the economy stands,” he said.
Mr Jaitley said that the depreciation of rupee was a cause of concern due to the inconsistency in the political and economists’ opinion adding if one only looked at the passing situation.
“As far as our internal situation is concerned, we have to consolidate our systems so the adverse impact on our growth is the least,” he noted.
He said that the government has taken steps to narrow down the CAD including cutting its borrowings by Rs 70,000 crore, doing away with withholding tax on masala bonds for the moment and allowing oil marketing companies to buy bonds worth $10 billion. He further said that the government is ready for further steps to deal with the situation as it proceeds.