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NEW DELHI: Asserting that September quarter growth numbers do not indicate a systemic slowdown, finance minister Nirmala Sitharaman on Friday said that economic activity will pick up in third quarter and India will remain the fastest growing major economy over the next few years.
“The fourth quarter, which was very good, had an impact on Q1. So, the numbers were not alarming. When quarter two (Q2) slows down and the growth numbers are reflecting (that), we should put it in the context of an economy and a governance structure, which was focused on elections (in Q1). It’s not a systemic slowdown. It’s more (due to) the absence of public expenditure, capital expenditure. I expect Q3 to make up for all this. The growth number is something, which is not necessarily going to get badly affected. We need to push up on many other factors. India, not just for this year but for next year and the year after also, has very good chances to remain the fastest growing economy,” Sitharaman said at an event organised by Ananta Centre.
The Indian economy grew 5.4% during July-September, the slowest pace of expansion in seven quarters, prompting most research agencies as well as RBI to lower the projection for the full year. Govt is, however, sticking to its projection of 6.5% GDP growth during the current fiscal year.
The minister’s comments during an interaction with 15th Finance Commission chairman NK Singh indicated that govt remained optimistic about the prospects in the medium term, although she did acknowledge some of the challenges due to the global economic situation.
“Plateauing of demand, especially in developed countries is a matter of concern for us. Equally, for agriculture, climate change is also bearing heavily upon us. Third, in traditional areas, where we had strengthened, labour-intensive items such as textiles, leather or footwear, we still have challenges because slowing demand (in developed markets) is not giving that additional marginal benefit out of exports.”
She, however, drew comfort from the domestic economy. “The domestic market is also growing, the purchasing power of Indians is improving. There are concerns about wages saturating. We are quite seized of the factors, which may have a play on India’s own consumption.”
