Lok Sabha Question No. 162 (STARRED), answered on 2017-12-29
Subject: Economic Growth
Ministry: FINANCE
Asked by: MIDHUN REDDY

Government of India Ministry of Finance Department of Economic Affairs

## LOK SABHA STARRED QUESTION NO. 162

TO BE ANSWERED ON DECEMBER 29, 2017

## ECONOMIC GROWTH

- *162. SHRI P.V. MIDHUN REDDY:

Will the Minister of FINANCE be pleased to state:

- (a) whether it is a fact that the economic growth has hit a three year low;
- (b) if so, the details thereof and the reasons therefor; and
- (c) the steps taken or proposed to be taken by the Government to boost the growth of the economy?

## ANSWER

FINANCE MINISTER (SHRI ARUN JAITLEY)

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

## STATEMENT REFERRED TO IN REPLY TO THE LOK SABHA STARRED QUESTION NO. 162 BY SHRI P.V. MIDHUN REDDY DUE FOR ANSWER ON DECEMBER 29, 2017.

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- (a)  &  (b)  As  per  the  latest  estimates  from  Central  Statistics  Office,  the  growth  rate  of  Gross Domestic  Product  (GDP)  at  constant  prices  was  7.5  per  cent,  8.0  per  cent  and  7.1  per  cent respectively in 2014-15, 2015-16 and 2016-17. The growth in GDP at constant market prices was 5.7 per cent and 6.3 per cent in Quarter 1 (Q1) and Quarter 2 (Q2) of 2017-18 respectively. The details are given in the following table.

| Table : Real Growth of GDP and Gross Value added (GVA) at constant (2011-12) prices   | Table : Real Growth of GDP and Gross Value added (GVA) at constant (2011-12) prices   | Table : Real Growth of GDP and Gross Value added (GVA) at constant (2011-12) prices   | Table : Real Growth of GDP and Gross Value added (GVA) at constant (2011-12) prices   | Table : Real Growth of GDP and Gross Value added (GVA) at constant (2011-12) prices   | Table : Real Growth of GDP and Gross Value added (GVA) at constant (2011-12) prices   |
|---------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------|
| Sector                                                                                | 2014-15                                                                               | 2015-16                                                                               | 2016-17 (PE)                                                                          | 2017-18 Q1                                                                            | 2017-18 Q2                                                                            |
| GDP at market prices                                                                  | 7.5                                                                                   | 8.0                                                                                   | 7.1                                                                                   | 5.7                                                                                   | 6.3                                                                                   |
| GVA at basic prices                                                                   | 7.2                                                                                   | 7.9                                                                                   | 6.6                                                                                   | 5.6                                                                                   | 6.1                                                                                   |
| Agriculture & allied                                                                  | -0.2                                                                                  | 0.7                                                                                   | 4.9                                                                                   | 2.3                                                                                   | 1.7                                                                                   |
| Industry                                                                              | 7.5                                                                                   | 8.8                                                                                   | 5.6                                                                                   | 1.6                                                                                   | 5.8                                                                                   |
| Manufacturing                                                                         | 8.3                                                                                   | 10.8                                                                                  | 7.9                                                                                   | 1.2                                                                                   | 7.0                                                                                   |
| Services                                                                              | 9.7                                                                                   | 9.7                                                                                   | 7.7                                                                                   | 8.7                                                                                   | 7.1                                                                                   |
| Source: Central Statistics Office (CSO). PE: Provisional estimates                    | Source: Central Statistics Office (CSO). PE: Provisional estimates                    | Source: Central Statistics Office (CSO). PE: Provisional estimates                    | Source: Central Statistics Office (CSO). PE: Provisional estimates                    | Source: Central Statistics Office (CSO). PE: Provisional estimates                    | Source: Central Statistics Office (CSO). PE: Provisional estimates                    |

Slower growth in 2016-17 reflects lower growth in industry and services sector. Economic growth of a country depends on a number of factors including structural, external, fiscal and monetary factors. Lower rate of global economy in 2016, along with a reduction in gross fixed investment to

GDP  ratio,  stressed  balance  sheets  of  the  corporate  sector,  lower  credit  growth  to  industry sector, etc. are some of the reasons for somewhat lower growth in 2016-17. It may however be mentioned that despite the slowdown in 2016-17, as per the IMF, India was the fastest growing major economy in 2016 and second fastest growing major economy in 2017 in the world.

(c)  The  Government of India has taken various initiatives to  boost the  growth  of the economy which, inter-alia, include;  fillip  to  manufacturing,  concrete  measures  for  transport  and  power sectors  as  well  as  other  urban  and  rural  infrastructure,  comprehensive  reforms  in  the  foreign direct investment  policy and  special package  for  textile  industry.  Government  had  also announced various measures in the budget 2017-18 to promote growth in the economy 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 launched a phased program for bank recapitalization. This entails infusion of capital to the public sector  banks,  that  is  expected  to  encourage  banks  to  enhance  lending.  The  Insolvency  and Bankruptcy  Code  was  enacted  to  achieve  insolvency  resolution  in  a  time  bound  manner.  To implement  the  Code,  the  National  Company  Law  Tribunal  was  established.  The  other  growth promotion measures include: lower income tax for companies with annual turnover up to Rs.50 crore;  further  measures  to  improve  the  ease  of  doing  business;  and,  a  major  push  to  digital economy.  As  per  information  available  from  Reserve  Bank  of  India,  the  gross  bank  credit (outstanding) for agriculture and allied sectors was Rs.9923.87 billion as on 2016-17 as against Rs. 8829.42 billion as on 2015-16. The introduction of the Goods and Services Tax (GST) has provided  a  significant  opportunity  to  improve  growth  momentum  by  reducing  barriers  to  trade, business and related economic activities.

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