Lok Sabha Question No. 192 (UNSTARRED), answered on 2019-11-18
Subject: Impact of Economic Slowdown
Ministry: FINANCE
Asked by: Rahul Ramesh Shewale, Bhartruhari Mahtab

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF ECONOMIC AFFAIRS

## LOK SABHA

## UNSTARRED QUESTION NO. 192

TO BE ANSWERED ON NOVEMBER 18, 2019

## IMPACT OF ECONOMIC SLOWDOWN

## 192.  SHRI RAHUL RAMESH SHEWALE: SHRI BHARTRUHARI MAHTAB:

Will the Minister of FINANCE be pleased to state:

- (a) whether the International Monetary Fund (IMF) is of the opinion that the effect of global economic slowdown will be more pronounced in some of the emerging market economies like India;
- (b) if so, the details thereof along with the reaction of the Government thereto;
- (c) whether the Government has conducted any study to ascertain the impact of such economic slowdown on growth rate and the livelihood of common man in the country;
- (d) if so, the details and outcome thereof and if not, the reasons therefor; and
- (e) the steps taken/being taken by the Government to mitigate the effects of economic slowdown, to boost the growth rate and to protect the livelihood of common man in the country?

## ANSWER

## MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI ANURAG SINGH THAKUR)

- (a) & (b): The World Economic Outlook - October 2019, released by International Monetary Fund mentions that over the past year global growth has fallen sharply. It states 'The slowdown in activity has been even more  pronounced  across  emerging  market  and  developing  economies,  including  Brazil,  China,  India, Mexico,  and  Russia,  as  well  as  a  few  economies  suffering  macroeconomic  and  financial  stress.'  India's GDP growth rate in 2018-19 was one of the highest among the major economies in the world. Detailed growth rates of various countries as published by IMF can be seen at Annexure.
- (c)  &  (d):  No  specific  study  has  been  done  in  this  regard.  Government  however  is  aware  that  global economic slowdown impacts a country's economy through lowering of its export growth and reduced inflow of  foreign  direct  investment.  Over  the  last  two  years,  India's  export  growth  has  been  moderate  and accordingly government has implemented various measures to promote exports. On the other hand, inflow of FDI in India has been increasing through continuous liberalization of FDI Policy.
- (e):  Government  is  committed  to  boosting  the  economic  growth  and  welfare  of  the  people.  To  this  end various  measures  are  announced  on  a  continuous  basis.  Recent  measures inter  alia ,  include,  further liberalization of Foreign Direct Investment policy, reduction of the base corporate tax from 30 percent to 22 percent, merger of 10 public sector banks into four entities, infusion of Rs. 70 thousand crores into public sector banks to improve liquidity in the market, deduction of additional income tax of Rs. 1.5 lakh on the interest paid on loans taken to purchase electric vehicles, reduction of GST rate on electric vehicles from 12 percent to 5 percent and relaxation of ECB guidelines for affordable housing. Measures announced to boost exports include, extending the scheme of reimbursement of taxes and duties for export promotion replacing MEIS  to  incentivize  exporters,  fully  automated  electronic  refund  for  Input  Tax  Credits  (ITC)  in  GST, expanding the scope of Export Credit Insurance Scheme (ECIS) by Export Credit Guarantee Corporation (ECGC), revised priority sector lending norms for exports credit. The Union budget 2019-20 further aims to provide a push to infrastructure development with the intention to invest Rs. 100 lakh crore in infrastructure over  the  next  five  years  and  by  restructuring  of  National  Highway  Programme.  Scheme  of  Fund  for Upgradation  and  Regeneration  of  Traditional  Industries  (SFURTI)  has  been  started  to  facilitate  cluster

based  development  to  make  the  traditional  industries  more  productive,  profitable  and  capable  for generating sustained employment opportunities. Government has expanded the cash transfer scheme 'PMKisan' to provide an income support of Rs. 6000 per year to all farmers, which was earlier limited to farmers with a land holding of less than 2 hectares.

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| Table 1.1. Overview of the World Economic Outlook Projections (Percent change, unless noted otherwise)   | Table 1.1. Overview of the World Economic Outlook Projections (Percent change, unless noted otherwise)   | Table 1.1. Overview of the World Economic Outlook Projections (Percent change, unless noted otherwise)   | Table 1.1. Overview of the World Economic Outlook Projections (Percent change, unless noted otherwise)   |
|----------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------|
|                                                                                                          |                                                                                                          | Projections                                                                                              | Projections                                                                                              |
|                                                                                                          | 2018                                                                                                     | 2019                                                                                                     | 2020                                                                                                     |
| World Output                                                                                             | 3.6                                                                                                      | 3.0                                                                                                      | 3.4                                                                                                      |
| United States                                                                                            | 2.9                                                                                                      | 2.4                                                                                                      | 2.1                                                                                                      |
| Germany                                                                                                  | 1.5                                                                                                      | 0.5                                                                                                      | 1.2                                                                                                      |
| France                                                                                                   | 1.7                                                                                                      | 1.2                                                                                                      | 1.3                                                                                                      |
| Italy                                                                                                    | 0.9                                                                                                      | 0.0                                                                                                      | 0.5                                                                                                      |
| Spain                                                                                                    | 2.6                                                                                                      | 2.2                                                                                                      | 1.8                                                                                                      |
| Japan                                                                                                    | 0.8                                                                                                      | 0.9                                                                                                      | 0.5                                                                                                      |
| United Kingdom                                                                                           | 1.4                                                                                                      | 1.2                                                                                                      | 1.4                                                                                                      |
| Canada                                                                                                   | 1.9                                                                                                      | 1.5                                                                                                      | 1.8                                                                                                      |
| China                                                                                                    | 6.6                                                                                                      | 6.1                                                                                                      | 5.8                                                                                                      |
| India                                                                                                    | 6.8                                                                                                      | 6.1                                                                                                      | 7.0                                                                                                      |
| Russia                                                                                                   | 2.3                                                                                                      | 1.1                                                                                                      | 1.9                                                                                                      |
| Brazil                                                                                                   | 1.1                                                                                                      | 0.9                                                                                                      | 2.0                                                                                                      |
| Mexico                                                                                                   | 2.0                                                                                                      | 0.4                                                                                                      | 1.3                                                                                                      |
| Saudi Arabia                                                                                             | 2.4                                                                                                      | 0.2                                                                                                      | 2.2                                                                                                      |
| Nigeria                                                                                                  | 1.9                                                                                                      | 2.3                                                                                                      | 2.5                                                                                                      |
| South Africa                                                                                             | 0.8                                                                                                      | 0.7                                                                                                      | 1.1                                                                                                      |

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## Annexure