Growth momentum to continue; GST Bill to be passed this year: FM

Indian economy has been showing signs of resilience and growth as the gross domestic product (GDP) growth climbed to 7.9 for the January-March quarter.

Finance Minister, Arun Jaitley has been hard-selling ‘the Indian story’ to global investors in Tokyo, Japan and says that the current growth momentum is likely to continue.

Speaking to CNBC-TV18’s Rituparna Bhuyan, he said that India is the fastest growing economy despite global headwinds and sees growth improving if urban and rural demand picks up.

The goods and services tax (GST) bill, if passed, can provide further stimulus to India’s growth momentum, Jaitley said.Below is the verbatim transcript of Arun Jaitley’s interview with CNBC-TV18's Rituparna Bhuyan. Q: We almost touched eight percent in Q4. Do you see this momentum continuing? A: I do see this momentum continuing and I see this continuing because this 7.6 percent growth rate that India has had is in a year of global slowdown and if you look at the analysis of this data we have improved marginally in agriculture even though there was inadequate rainfall we maintained a high growth rate in services though it has dipped a little because the service exports must has suffered because the global players are buying less and there is an improvement in manufacturing. What is significant is there is a consumer demand and there is an increased consumer spending. Now, in the last two years a number of factors were loaded against us. There was a global slowdown, there was inadequate monsoon, there was lack of demand and yet we were able to grow at this rate which was the fastest in the world. In fact people across the world are a little surprised as to how India could maintain this growth rate. As we look to the year ahead the reform process is going to continue. Hopefully if Goods and Services Tax (GST) is passed it has the potential to add to India's growth rate.Our increased infrastructure spending, our rural spending will enlarge economic activity and what is most important is that in case we have a good monsoon which all indications are likely a good monsoon this year will actually mean an increase in agricultural production. It also will mean increased purchasing power and more rural demand. So, if the combination of urban and rural demand both increase India's ability to improve on the 7.6 percent I feel optimistic on that. Q: Exports, that seems to be dragging gross domestic product (GDP) a bit. A: Exports are dependent on two factors. One is the ability of global economies to pick up products and services. So, if the world is moving slowly the world will buy less. Secondly even if it buys the same amount the values are less because commodity prices are low, oil prices are low and don't forget that 18 percent of India's export is still refined oil. Now if this situation changes it can increase. Plus, if India were to bring in a cutting edge by improving its cost competitiveness in exports India could do better. Q: Oil and commodity prices seem to have bottomed out globally. Going forward if the prices keep increasing what are the options that we can have? A: I don't think it is possible for me to put a final word on that because nobody really has been able in the past to predict the actual growth path of oil and commodities and therefore let us see how they move in the course of the year.