Finance minister Nirmala Sitharaman has said the current upturn in economic activity in last two months is not just pent up demand and recovery is likely to sustain coming months.
“I am not just sure if just the pent up demand or festival demand will explain consistent more than ₹1 trillion collection in GST for two months. Yes, this is the season when festive demand adds a bit more fervor to demand which prevails through in a year, but I also talk to industry leaders like in core sector industries such as cement, iron and steel, who are looking at capacity expansion. It is an indication that additional demand is what is coming in and is likely to sustain,” Sitharaman said speaking at the Hindustan Times Leadership Summit.
On rising inflation which has forced the central bank to pause its rate cut cycle, Sitharaman said she is not worried about the current high level of inflation as it is seasonal in nature. “Rise in prices in commodities are largely seasonal.
“Government is very frequently looking at changes and taking conscious calls for imports, and sorting out logistical issues. The blip in inflation will ease out. I don’t see food item inflation continuing,” she added.
Asked whether the reluctance by RBI to further cut policy rates puts additional pressure on the government to take more fiscal measures to revive the economy, Sitharaman said it would need delicate, continuous real time balance by both the monetary and fiscal authorities to revive the economy. “Lot of calibration and coordination has to be worked out and we are continuing to do that,” she added.
The RBI on Friday projected the Indian economy to contract 7.5% in FY21, shallower than 9.5% contraction it projected just two months ago, on the back of a host of lead indicators suggesting sustained economic recovery.
Indian stocks hit fresh highs on Friday after the Reserve Bank of India revised upwards its GDP target for the current fiscal year. The central bank kept the interest rates steady and pledged to ensure adequate liquidity in the system.
Sensex settled at 45,079.55, up 446.90 points or 1.00%, while Nifty climbed 124.65 points or 0.95% to end at 13,258.55.
ICICI Bank, closing over 4% higher, was the top Sensex gainer followed by Ultratech Cement, Sun Pharma, Bharti Airtel and SBI. RIL, Bajaj Finserv, HCL Tech and HDFC were among the laggards. Of 30 Sensex shares, 25 closed in the green.
