Assuring that the effects of GST are settling down and that consumption is picking up, Finance Minister Arun Jaitley said on Saturday that the economy will post a high growth or gross domestic product (GDP) this fiscal year. The comments from the finance minister came at a time when the rupee has been sinking to multiple lows and crude oil prices are soaring. The government will also meet and perhaps exceed its disinvestmemt target for fiscal 2019, Mr Jaitley said, after a meeting chaired by PM Narendra Modi, where he took stock of the economy.
Here is a 10-point cheatsheet on this big story:
- PM Modi expressed satisfaction with regard to the broad parameters emerging this year on the economy, said Mr Jaitley.
- This year’s fiscal deficit target of 3.3 per cent of GDP will be met, he said.
- “We have already spent 44 per cent of capital expenditure and we will not cut any expenditure,” he added.
- RBI Governor Urjit Patel and the Department of Revenue made a detailed presentation in this meeting.
- Saturday’s meeting was preceeded by a another one held on Friday’s in which the government announced that it will cut non-essential imports and increase exports to control the widening current account deficit (CAD). Finance Minister Arun Jaitley also said that the government will remove withholding of tax on masala bonds.
- The rupee has been hitting multiple lows almost every day this month. Despite strong GDP (Gross Domestic Product) growth, the rupee has weakened about 11 per cent this year amid higher oil prices and an emerging markets sell-off, reported Reuters. This has widened the current account deficit and pushed the balance of payments into the red in April-June for the first time in six quarters and stoked inflationary pressure on the economy.
- The CAD rose to $15.8 billion or 2.4 per cent of GDP in the first quarter from $15.0 billion or 2.5 per cent a year ago. The merchandise trade gap widened to $45.7 billion from $41.9 billion.
- Trade deficit stood at $17.4 billion in August, as against a near five-year high of $18.02 billion in the previous month.
- According to government data, wholesale inflation stood at 4.53 per cent in August, marking the lowest level of price increase rate recorded since April this year. In July, wholesale inflation was at a four-year high of 5.09 per cent. Softening of food prices, especially vegetables, led to easing in the overall WPI figure.
- Consumer inflation eased to 3.69 per cent in August, from 4.17 per cent in the previous month. That marked the lowest level of retail inflation recorded since October 2017, when it was at 3.58 per cent. Retail inflation cooled to a 10-month low in August on cheaper food items while industrial output expanded by 6.6 per cent in July, the official data showed. Food inflation slowed to 0.29 per cent from a year earlier, against 1.37 per cent in July.
Source: NDTV Profit