Hyderabad: Telangana’s Finance Minister T. Harish Rao told the Union Finance Minister that she must address the current slowdown in the economy, and it is imperative to empower states in terms of both financial resources and autonomy as states are the drivers of economic activity.
Speaking at the pre-budget meeting of finance ministers with Union Finance Minister Nirmala Sitharaman in New Delhi on Wednesday, Mr Harish Rao made several suggestions to address the current economic slowdown.
He said that with the exception of macroeconomic policies, much of the action in developing both physical and social infrastructure and providing an investor-friendly ecosystem lies with the states. The current economic slowdown was unique, he pointed out, in that while inflation was low and external imbalances were modest, the decline began with a loss of confidence not among foreign investors, but among the country’s domestic investors and consumers.
“The growth has been hit more by domestic developments such as stalled investments, improper implementation of the GST, collapse of the NBFC sector, higher rates of unemployment resulting in decline in consumption and high non-performing assets in the public sector banks resulting in low credit growth,” Mr Rao said.
Maintaining that one of the main concerns today is decelerating growth of GDP since 2016-17, he pointed out that “from 8.2 per cent in 2016-17, the growth of GDP decelerated to 7.2 per cent in 2017-18 and further to 6.8 per cent in 2018-19”. The growth of GDP in the second quarter of the current year (2019-20) was just 4.5 per cent, the lowest since 2013, he added.
He also pointed out that there are a number of concerns with regard to the implementation of GST which need to be addressed urgently to restore the trust reposed by the states in the Union. States agreed to the introduction of GST even at the cost of their autonomy for the sake of tax harmony across the country. He said GST has subsumed 31 per cent of the gross tax revenue of the Centre.
