New Delhi: Finance Minister Arun Jaitley said that the last week for many of us was a historic one. The celebration of the BJP-NDA electoral victory was still on. The swearing in ceremony of the Prime Minister and his Council of Ministers became a memorable event. The presence of the SAARC leaders at the swearing in was itself a statement. The distribution of responsibility to the Ministers however brought the realization of what lay ahead of us. For me, the last week evolved from celebration to a challenge. Given the responsibility of two major ministries, distribution of time to cover up the backlog of pending issues on account of code of conduct was paramount. My immediate challenge of course is the state of economy which stares at all of us.
He further said that we have inherited an economy whose GDP has grown by sub 5% for two years in a row. Mining and quarrying sectors have gained a negative growth trend. The manufacturing sector has had an abysmal performance last year. The investment cycle has been disturbed. The negative sentiment has affected trade, hotels and transportation sectors which are posed for a slower growth compared to last year. As per the CSO estimates, released in May, the inflation continues to be rising with April figure at 8.9%. The slow-down in economic growth coupled with high inflationary pressure poses a challenge to the macro economic environment. Tax collections are at 10.1% of the GDP compared to the initial budget estimates of 10.9%.
India can ill afford this trend. This has serious social consequences since slow down comes with a decade of jobless growth. Reviving the growth momentum, containing inflation and altering the pattern of growth to gainful employment is today an overriding priority. There is a need to boost domestic low-cost manufacturing and hasten the pace of reforms. Price stability and growth are inter-twined but may require a different strategy.
The victory of NDA and the significant electoral setback to the Congress was on account of the reflection of two different electoral attitudes. There was a high level of dissatisfaction with the previous government. There was hope in the BJP/NDA led by Narendra Modi is this hope which commands us to pull the country out of the present economic situation. This will involve fiscal rectitude as combination of monetary and fiscal policy. Slower GDP growth will imply lower tax buoyancy and higher fiscal deficit. We must move towards an era of fiscal discipline where we can reduce the fiscal deficit, contain inflation and improve upon our growth rates. India must prepare itself for this. We must commit ourselves to this discipline so that in order to strengthen the Indian economy which can improve the quality of life of every Indian and pull out the deprived ones from the state of poverty. Short term disciplining till we reverse the present trend will give us long term benefits.
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