Lok Sabha Question No. 276 (STARRED), answered on 2018-01-05
Subject: Growth of Indian Economy
Ministry: FINANCE
Asked by: POONAMBEN HEMATBHAI MAADAM

## Government of India Ministry of Finance Department of Economic Affairs

## LOK SABHA STARRED QUESTION NO. 276

TO BE ANSWERED ON JANUARY 5, 2018

## GROWTH OF INDIAN ECONOMY

*276. SHRIMATI POONAMBEN MAADAM:

Will the Minister of FINANCE be pleased to state:

- (a) whether as per the report of United Nations Indian economy is likely to expand by 7.2 per cent in 2018 and go up further to 7.4 per cent in the following year and if so, the details thereof;
- (b) the manner in which large scale public investment initiated by the Government has resulted in growth of the Indian economy;
- (c) whether confidence in the Indian economy has increased substantially on account of the policy measures of the Government and of the Central bank; and
- (d) if so, the details of the policy measures undertaken for the purpose?

## ANSWER

FINANCE MINISTER (SHRI ARUN JAITLEY)

- (a) to (d) A Statement is laid on the Table of the House.

## STATEMENT REFERRED TO IN REPLY TO THE LOK SABHA STARRED QUESTION NO. 276 BY SHRIMATI POONAMBEN MAADAM DUE FOR ANSWER ON JANUARY 5, 2018

…..

(a)  As  per  the World  Economic Situation and Prospects 2018 report of  the United Nations, the Indian economy is projected to grow at 7.2 per cent in 2018-19 and 7.4 per cent in 2019-20. The report indicates that the outlook for India remains largely positive, underpinned by robust private consumption and public investment as well as ongoing structural reforms.

(b)  Share  of  public  sector  (including  public  financial  and  non-financial  corporations  and  general government) in total Gross Fixed Capital Formation (GFCF) increased from 21.4 per cent in 201112 to 22.0 per cent in 2014-15 and further to 25.2 per cent in 2015-16 (the latest year for which data is available). The share of public GFCF in GDP at current prices increased from 6.7 per cent in  2014-15 to 7.4 per cent in 2015-16. From the demand side, the contribution of Public sector GFCF to GDP growth was about 20 per cent in 2015-16.

(c) The confidence in the Indian economy has increased on account of policy measures taken up by the government and Reserve Bank of India. Recently, Moody's rating agency upgraded India's local  and  foreign  currency  issuer  rating  to  Baa2  with  a  stable  outlook  from  Baa3  on  the expectation  that  continued  progress  in  India's  economic  reforms  will  enhance  India's  growth potential  over  time.  According  to  World  Bank's  Ease  of  Doing  Business  2018  Report,  India's ranking  improved  by  30  positions  to  100th  rank  in  2018.  As  per  the  World  Economic  Forum, India's rank in Global Competitiveness Index is 40 out of 137 countries in 2017-18, improvement over 71 out of 144 countries in 2014-15 and 55 out of 140 countries in 2015-16. The gross FDI flows to India in 2016-17 amounted to US$ 60.2 billion, as compared to US$ 55.6 billion in 201516  and  US$  45.1  billion  in  2014-15.  During  first  half  of  2017-18,  the  gross  FDI  inflow  in  the economy was US$ 33.7 billion, higher as compared to the corresponding period of last year.

(d) The Government of India has taken various initiatives to improve the confidence in the Indian economy and boost the growth of the economy and which, inter-alia, include; fillip to manufacturing, concrete measures for transport and power sectors as  well as other urban and rural infrastructure and comprehensive reforms in the foreign direct investment policy. Government had also announced various measures in the budget 2017-18 which, among others, include 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 announced a phased program for bank recapitalization to the tune of about Rs 2.11 lakh crore over the next two years. This is expected to encourage banks to enhance lending. The Insolvency and Bankruptcy Code was enacted to achieve insolvency resolution in a time bound manner. The other measures include: lower income tax for companies with annual turnover up to Rs 50 crore and, a major push to  digital  economy.  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. Reserve Bank of India (RBI) reduced the repo rate by 200 basis points in 3 years  (2015  to  2017).  RBI  undertook  many  steps  to  address  the  vulnerabilities  in  the  banking system,  that  inter-alia  include,  issuing  the  framework  to  revitalise  the  distressed  assets  in  the economy  and  establishment  of  Central  Repository  of  Information  on  Large  Credits  to  reduce information asymmetry.