Lok Sabha Question No. 3209 (UNSTARRED), answered on 2018-01-05
Subject: GDP Growth/Economic Growth
Ministry: FINANCE
Asked by: BALASUBRAMANIAM SENGUTTUVAN, DUSHYANT CHAUTALA, PARASURAMAN K.

Government of India Ministry of Finance Department of Economic Affairs

## LOK SABHA

## UNSTARRED QUESTION NO. 3209

TO BE ANSWERED ON JANUARY 5, 2018

## GDP GROWTH/ECONOMIC GROWTH

3209. SHRI B. SENGUTTUVAN: SHRI DUSHYANT CHAUTALA: SHRI K. PARASURAMAN:

Will the Minister of FINANCE be pleased to state:

- (a)  whether  the  Government  has  constituted  an  expert  Committee  to  identify  the  reasons  for declining GDP growth/economic growth;
- (b) if so, the details and the outcome thereof;
- (c) whether the principal decline in GDP growth is on account of decline in industry, if so, the details thereof along with the action taken thereon;
- (d)  whether  the  Government  is  considering  the  offer  of  Rs.  40,000  crore  fiscal  stimulus  to  the economy to boost exports, support MSMEs and expand bank credit etc., if so, the details thereof; and
- (e) whether the move whilst arresting the slowdown widen the fiscal deficit, if so, the details thereof along  with  other  proactive  steps  taken  by  the  Government  to  provide  a  stimulus  to  the  slow economic growth?

## ANSWER

MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI PON RADHAKRISHNAN)

- (a) & (b) The Government has not constituted any expert Committee to identify reasons for declining GDP growth/economic growth.
- (c) The growth rate of industry sector declined from 8.8 per cent in 2015-16 to 5.6 per cent in 201617, and declined further in first quarter (Q1) of 2017-18. However, the growth rate picked up to 5.8 per cent in second quarter (Q2) of 2017-18. The annual growth rate of GDP and GVA of industry sector is given in the table below:

| Growth of GDP and GVA of Industry Sector at constant (2011-12) prices   | Growth of GDP and GVA of Industry Sector at constant (2011-12) prices   | Growth of GDP and GVA of Industry Sector at constant (2011-12) prices   | Growth of GDP and GVA of Industry Sector at constant (2011-12) prices   | Growth of GDP and GVA of Industry Sector at constant (2011-12) prices   | Growth of GDP and GVA of Industry Sector at constant (2011-12) prices   | Growth of GDP and GVA of Industry Sector at constant (2011-12) prices   | Growth of GDP and GVA of Industry Sector at constant (2011-12) prices   |
|-------------------------------------------------------------------------|-------------------------------------------------------------------------|-------------------------------------------------------------------------|-------------------------------------------------------------------------|-------------------------------------------------------------------------|-------------------------------------------------------------------------|-------------------------------------------------------------------------|-------------------------------------------------------------------------|
|                                                                         | 2012-13                                                                 | 2013-14                                                                 | 2014-15                                                                 | 2015-16                                                                 | 2016-17 (PE)                                                            | 2017-18 Q1                                                              | 2017-18 Q2                                                              |
| GDP at market                                                           | 5.5                                                                     | 6.4                                                                     | 7.5                                                                     | 8.0                                                                     | 7.1                                                                     | 5.7                                                                     | 6.3                                                                     |
| Industry                                                                | 3.3                                                                     | 3.8                                                                     | 7.5                                                                     | 8.8                                                                     | 5.6                                                                     | 1.6                                                                     | 5.8                                                                     |

Note: PE: Provisional Estimates

Industry sector comprises of Mining & Quarrying, Manufacturing, Electricity, gas, water supply & other utility services and Construction

Source: Central Statistics Office

The contribution of industry  sector  to GVA  growth averaged 26.5 per cent between 2012-13 and 2015-16. It was 26.6 per cent in 2016-17. It declined to 9.3 per cent in Q1 of 2017-18 and improved to 29.3 per cent in Q2 of 2017-18.

The Government of India has taken various initiatives to boost manufacturing and industrial activity in the economy, inter-alia, including; fillip to manufacturing via initiatives like Make-in-India programme  containing  comprehensive  measures  for  improving  the  ease  of  doing  business; encouragement  to  budding  entrepreneurial  talent  under  the  Start-up  India  and  Stand-up  India initiatives; comprehensive reforms in the foreign direct investment policy and concrete measures for infrastructure sector. Government had also announced various investment promotion measures in the  budget  2017-18  which,  among  others,  include,  lower  income  tax  for  companies  with  annual turnover up to Rs 50 crore, allowing carry-forward of MAT credit up to a period of 15 years instead of 10 years at present, push to infrastructure development by giving infrastructure status to affordable housing, higher allocation to highway construction, and focus on coastal connectivity. For highways development,  the  Bharatmala  Pariyojana  has  been  launched.  The  government  has  launched  a phased program for bank recapitalization which entails infusion of capital to the public sector banks, which  is  expected  to  encourage  banks  to  enhance  lending.  The  introduction  of  the  Goods  and Services  Tax  has  provided  a  significant  opportunity  to  improve  growth  momentum  by  reducing barriers to trade, business and related economic activities.

(d): There is no such proposal, presently.

(e): Does not arise.

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