Slump in economic growth has bottomed out, says top govt official

India’s economic growth is showing signs of revival with pick-up in lending and recovery in the automobile sector, a top government official said insisting that the slump in GDP growth has bottomed out.

India’s economic growth in April-June hit a six-year low of 5 per cent and there were signs that expansion may not have picked up substantially in the subsequent quarter. But with the onset of festival season in October, there are signs of a revival.

Between October 1 and 9 alone, about Rs 81,000 crore has been extended as loans, the official said adding that the lending momentum has only picked up in the following weeks.
Also, festival buying has revived automobile sales with demand for cars showing signs of coming back.

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The official rejected the reasons cited by Moodys Investors Service for revising downwards its outlook for India’s rating to negative from stable, saying there was no need for a revision when the economic activity is showing signs of picking up.

Moodys has cited continued slowdown for its action – the first step towards a rating downgrade.

The official said the government has been sensitive to the concerns of all sectors and has been proactively taking measures to address them.

The attempt has been to revive investment and address liquidity concerns by mandating compulsory release of funds to MSME with a stipulated timeframe, the official said.

On India’s decision not to join the 16-nation free trade block, the top official said New Delhi already has free trade agreements with top ASEAN nations and some other leading trade partners of RCEP.

The Modi government, the official said, would not compromise on the national interest and would not join RCEP till it is titled against it.

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