GST collection, power consumption show recovery: Ex-RBI chief

Says COVID-19 like a coma that stays for a short period

GST collection, power consumption show recovery: Ex-RBI chief

A worker sprays color on idols of Goddess Laxmi and Ganesha ahead of Diwali festival, in Jaipur, on Thursday, November 5, 2020. PTI

Chennai, November 5

Former governor of the Reserve Bank of India (RBI) C Rangarajan on Thursday said the decline in the growth of the economy triggered by COVID-19 was like a coma that stays for a short period.

Rangarajan, also the former Prime Minister’s Economic Advisory Council chairman, said this during ‘SICCI-360’ organised here by the Southern India Chamber of Commerce and Industry.

“(Normally) Coma lasts for several years (in medical terms). But there are people who come out of it in a shorter period. This is a coma which is short-lived. The point is as you (gradually) lift the lockdown, I expect the economic activity to pick up,” he said.

“There are indications or signs of the economy picking up  -- collection of GST (goods and services tax) and consumption of electricity,” he said to a query from a participant.

According to the Finance Ministry, the GST collected in October rose to Rs 1.05 lakh crore, crossing the Rs 1-lakh- crore mark for the first time since February this year, reflecting a pick-up in the economic activity.

The revenues for the month were 10 per cent higher than Rs 95,390 crore collected in the same month last year.

Elaborating on this, Rangarajan said, “Beginning September till March, there could be a pick-up in economic activity. But it will not be adequate to compensate for the loss that happened in the first half of the financial year.”   If there is no second wave of COVID-19, 2021-22 can see a pick-up and by the end of FY 2021-22, there will be further picking up (of the economy), he said.

Noting that the growth rate was nine per cent for three consecutive years between 2000 and 2010, he said, “Unfortunately, it later fell and further declined. We need a fast-growing economy and that requires not only measures not only from the government but also from the private sector.”   To a query on the weakening of the rupee against the US dollar, he said inflation should be brought under control as external value of the currency was determined by its internal value.

“Fall in value of rupee in terms of the dollar is essentially a demand for goods from the United States, which was stronger compared to Indian goods. Indian goods should be competitive,” he said.

“The fact of the matter is the external value of currency is essentially determined by the internal value of the currency. That is what economists were saying. In western economies, the inflation has been very much under control.

But our inflation rate has been much higher and it has ultimately contributed to the reduction in value of rupee,” he said.

Rangarajan also cautioned that reduction in inflation rate would also have an impact on the country’s economic growth.

“The attempt to reduce inflation rates will have an adverse impact on growth. Some people think that we can sacrifice price stability to some extent for a higher rate of growth. But that is an argument that is going on. I may have a view but some other economists might offer a different view,” he said. — PTI

Don't Miss

Tracing the origins of Pashmina

Tracing the origins of Pashmina

Up against issues of racism Down Under

Up against issues of racism Down Under

Why we need to mock ourselves a little, reset our systems

Why we need to mock ourselves a little, reset our systems

Trump’s coup de tweet

Trump’s coup de tweet

Respect every opinion

Respect every opinion

Top Stories

Farmer leaders finalise route for ‘Kisan tractor parade’ on Republic Day

Farmer leaders finalise route for ‘Kisan tractor parade’ on Republic Day

‘There will be no disruption in national Republic Day parade...

SC to hear pleas on farm laws after recusal of member from panel set up to resolve impasse

SC to hear pleas on farm laws after recusal of member from panel set up to resolve impasse

In an “extraordinary” interim order on January 12, a bench h...

SC-appointed panel on farm laws to hold first meeting on January 19

SC-appointed panel on farm laws to hold first meeting on January 19

Bhartiya Kisan Union president Bhupinder Singh Mann, however...

UK's Boris Johnson invites PM Modi to attend G-7 summit

UK's Boris Johnson invites PM Modi to attend G-7 summit

Prime Minister Johnson also plans to visit India before the ...

Cities

View All