Former Finance Minister Yashwant Sinha, on Monday, said that the key reasons for the slowdown in economy are the contraction in demand and reluctance to invest. Sinha, while accusing corporates, said that some of them are sitting on a pile of cash, but are not making investments, thus affecting demand. 

International agencies are questioning us: Sinha

The former BJP leader, while delivering a speech on the subject, 'Economic slowdown: structural or cyclical', at the Gokhale Institute of Politics and Economics in Pune, said that no one can trust the figures, data and statistics put out in the country anymore and that several international agencies like the International Monetary Fund (IMF) and the World Bank have raised questions over them.

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"Corporate, PSU sectors have suffered in the last year. The demand in the economy, which is the growth engine, has come crashing down," he said. He also added, "Some corporates are not investing because they depend on bank loans for investment and banks have withdrawn some of their facilities. But there are some corporate firms who are sitting on cash, but are not investing and the major reason behind this that is there is no demand.”

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Seven-year low slowdown in the economy

As per the government data, the economic growth of India presented a slowdown to a seven-year low to 5 per cent in April to June quarter from 8 per cent a year ago. The slowdown has largely been attributed to a sharp dip in the manufacturing sector and agriculture output, the Ministry of Statistics and Programme Implementation had said in a statement. 

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On a related note, Finance Minister Nirmala Sitharaman recently introduced cuts in corporate taxes as part of the stimulus to help the economy recover from the ongoing slowdown. In a move that presented the government’s efforts towards introducing reforms for the nation and pleasantly surprised everyone, Sitharaman surpassed expectations and introduced an across-the-board rate of 22% for all domestic corporate taxpayers subject to the corporates not claiming any exemptions or incentives.

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(With PTI inputs)