Arun Jaitley Acknowledges Growth Concerns, Blames It On GST
Jaitley says India will have to work on improving growth figures.
Finance Minister Arun Jaitley on Thursday acknowledged India’s growth slowdown as a “matter of concern” adding that it was due to destocking seen ahead of the implementation of the Goods and Services Tax.
"This seems predominantly the pre-GST effect, that you destock but do not continue to manufacture even as sales increase", Jaitley said in a media conference after the government released macroeconomic data for the first quarter.
India's gross value added growth (GVA), which excludes impact of taxes and subsidies, grew at 5.6 percent, unchanged from the previous quarter. Gross domestic product growth too slowed to 5.7 percent from 6.1 percent at the end of March.
GVA growth, in the manufacturing sector stood at 1.2 percent compared to 10.7 percent in the same quarter last year. Manufacturing activity in June had fallen to a multi-year low as dealers cleared inventory and waited for new tax rates to come with GST in July.
In the coming quarters we really require to, both in terms of policy and investment, to work more to improve upon these figures.Arun Jaitley, Finance Minister
With GST now operationalised, Jaitley said the sector “probably could turn for the better” as manufacturers increase output to meet demand.
The government is still hopeful of over 7 percent growth his fiscal based on certain positives including strong foreign direct investment (FDI) inflows, good monsoons and strength in the global economy.
He added that domestic public investments will be “quite high because the revenue trend seems to be positive”. Another aspect, he said, would be any early successes on insolvency proceedings as India looks pull its banking system out of the bad loan mess.