Economy on track despite ‘unsupportive’ global factors: Arun Jaitley

Union finance minister Arun Jaitley speaks at the India Economic Forum 2017, in Mumbai.

Finance minister Arun Jaitley said on Friday that despite “unsupportive” global factors, the government has broadly put the economy on track.

Jaitley has been holding consultations with his Cabinet colleagues and senior government officials to devise plans to lift the sagging growth.

The GDP expansion hit three-year low of 5.7 per cent in the April-June quarter with India losing the fastest-growing economy tag to China for the second straight quarter.

“Here we were facing somewhat globally unsupportive environments. And yet, I will say with a sense of satisfaction that we have broadly put the economy on track,” Jaitley said at an event organised here by Bloomberg.

“I think in terms of maintaining a steady rate of growth, in terms of systematically moving forward in the reform direction not deviating from the overall path itself, and maintaining a more transparent, a more realistic fiscal prudence better than most periods in event history, we were able to move forward,” he said.

Besides falling GDP growth rate, exports are facing strong headwinds and the industrial expansion is the lowest in five years.

The current account deficit (CAD) – the difference between inflow and outflow of foreign exchange – has risen to 2.4% of GDP in April-June.

Jaitley also said the government was more keen to merge stronger banks rather than weaker ones and is in the process of finalising a strategy on consolidation of state-run lenders.“The object of consolidation is to create bigger and stronger banks.”

“I would rather have stronger banks merging rather than weaker banks merging,” he added.

The minister said bank consolidation has to move in tandem with the process of strengthening the banks, which are struggling with asset quality issues.

He said the government is also planning to come up with its strategy which will spell out the way forward on both consolidation and strengthening of lenders.

“We are at a very advance stage of deciding our strategy, we are looking at both consolidation and strengthening,” he said.