At a crossroads
The United Kingdom’s economy has encountered a challenging phase, with consecutive monthly declines in GDP marking the first back-to-back contraction since the tumultuous days of the Covid-19 lockdowns.
Finance Minister Nirmala Sitharaman on Tuesday said the Central Government will start funding infrastructure projects once the task force submits its report. She added the Government is talking with representatives of industrial sectors across the country and is ready to address their issues.
Consumption will increase when the government starts spending on infrastructure, according to the minister. The task force is in the process of identifying the infrastructure projects that are to be funded, as well as expedited.
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When asked about the dip in the growth of Gross Domestic Product (GDP) in the first quarter that ended in June to five per cent, Sitharaman pointed out that such dips and highs had happened in the past as well.
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Sitharaman pointed out the need to widen the Goods and Services Tax (GST) basket, on which both Central and state governments need to discuss. When asked about the reduction in GST demanded by several industry sectors, Sitharaman said she could not comment on what the GST Council would consider.
On bank merger, Sitharaman said there are banks that get funds in the form of savings but do have demand for credit, while other banks have a higher demand for credit but their savings are less.
The banks having a higher demand for credit have to borrow money to lend, which in turn increases their cost of funds and the lending rate. She said that banks have to grow bigger along with economic growth to meet the increased demand.
(With input from agencies)
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