Lok Sabha Question No. 7 (STARRED), answered on 2019-11-18
Subject: Economic Slowdown
Ministry: FINANCE
Asked by: N.K. Premachandran

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

## LOK SABHA

## STARRED QUESTION NO. 7

TO BE ANSWERED ON NOVEMBER 18, 2019

## ECONOMIC SLOWDOWN

## *7. SHRI N.K. PREMACHANDRAN:

Will the Minister of FINANCE be pleased to state:

- (a) whether the Government has analysed the reasons for economic slowdown in the country and if so, the details thereof;
- (b) whether the Government has also analysed the impact of implementation of the Goods and Services Tax (GST) on economic slowdown and if so, the details thereof;
- (c) whether the Government has conducted any study regarding the impact of implementation of foreign trade agreements and economic slowdown and if so, the details thereof;
- (d) whether the Government has initiated any action to overcome the present crisis developed due to economic slowdown and if so, the details thereof; and
- (e) whether the Government proposes to change the policy so as to overcome the economic slowdown and if so, the details thereof?

## ANSWER

THE FINANCE MINISTER

(SMT. NIRMALA SITHARAMAN)

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

## STATEMENT REFERRED TO IN REPLY TO THE LOK SABHA STARRED QUESTION NO. 7 BY SHRI N.K. PREMACHANDRAN DUE FOR ANSWER ON NOVEMBER 18, 2019

- (a) As per the National Statistical Office (NSO), GDP growth on average was 7.5 percent in 201419, which is the highest amongst G-20 countries. The World Economic Outlook (WEO) of October 2019, projects a significant slowdown in world output and trade in 2019. Yet India, despite some recent deceleration of GDP growth, is still projected by WEO to grow at the fastest rate in 2019-20 among  G-20  countries.  Government  has  been  taking  several  measures  to  address  moderate levels  of  fixed  investment  rate  in  the  economy,  plateauing  of  private  consumption  rate  and  a modest export performance, with a view to increasing the GDP growth of the country.
- (b) One of the objectives of Goods and Services Tax (GST) is to make India a common market with a view to sustaining a high level of GDP growth in the country. Further, in the World Bank's Ease of Doing Business 2020 Report, India's ranking improved by 14 positions to 63 in 2019 from 77 in 2018 after GST was implemented in 2017.
- (c)  Government  publishes  an  Economic  Survey  of  the  country  on  an  annual  basis  analyzing various aspects  of  the  economy  including  trade  agreements  and  state  of  the  economy.

Government has also been engaging with various stakeholders to understand their concerns and taking appropriate measures for the economy.

(d)  &  (e)  During  the  last  five  years,  government  has  implemented  major  reforms  to  build  the investment  climate  in  the  country  for  becoming  a  US  5  trillion-dollar  economy.  Introduction  of Insolvency  and  Bankruptcy  Code  (IBC)  in  2016  is  a  significant  step  towards  cleaning  and strengthening the financial system of the country. Implementation of Goods and Services Tax in 2017  stands  out  as  the  most  important  measure  for  improving  ease  of  doing  business  in  the country. Make-in-India programme is a major initiative towards increasing the indigenous capacity of the country to produce world class goods and services. Continuous liberalization has resulted in record  and  unprecedented  inflows  of  foreign  direct  investment  into  the  country.  And  all  along government  has  kept  inflation  low,  fiscal  spending  disciplined  and  current  account  deficit manageable to ensure macroeconomic stability so necessary to sustaining a healthy investment climate in the country. More recently Government has cut corporate tax rate from 30 percent to 22 percent to boost investment activity in the country. In particular, the corporate tax rate has been cut to 15 percent for new domestic manufacturing companies which is amongst the lowest in the world. This complements a cut in the repo rate by 135 basis points during 2019 by the Reserve Bank  of  India  and  mandating  of  banks  to  link  their  lending  rates  with  external  benchmarks  for reducing  the  cost  of  capital  for  investors.  Government  has  also  extended  PM  Kisan  scheme  to include all farmers, which will boost rural consumption.

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