Lok Sabha Question No. 1298 (UNSTARRED), answered on 2020-09-19
Subject: GDP Growth Rate
Ministry: FINANCE
Asked by: Manish Tewari

## GOVERNMENT OF INDIA MINISTRY OF FINANCE

## DEPARTMENT OF ECONOMIC AFFAIRS

## LOK SABHA

## UNSTARRED QUESTION NO. 1298

TO BE ANSWERED ON 19.09.2020

## GDP GROWTH RATE

## 1298.  SHRI MANISH TEWARI:

Will the Minister of FINANCE be pleased to state:

- (a) the details of reasons as to why there has been a secular decline in the GDP growth rate of the economy for eight consecutive quarters preceding the onset of the COVID-19 pandemic;
- (b) whether a contraction of 23.9 per cent in the GDP in the first quarter of fiscal 2020-2021 indicate that Indian economy is in a recession and if so, the details thereof;
- (c) whether the Minister/Ministry was consulted before the decision to impose the national lockdown was taken on the 23rd of March 2020 and if so, the details thereof;
- (d) whether the Ministry outlined the deleterious impact that the national lockdown would have on an already sluggish economy and if so, the details thereof and the time when and the manner in which those concerns were articulated by the Ministry;
- (e) the number of years it would possibly take for the economy to recover from the setback of the national lockdown as per the estimation of the Ministry; and
- (f) whether any assessment was done by the Ministry in terms of lives qua livelihoods before tendering advise, if any and if so, the details thereof?

## ANSWER

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

- (a) As per the estimates of Gross Domestic Product (GDP) released by National Statistical Office (NSO), GDP growth on average was 7.4 percent in 2014-19, which was the highest amongst G-20 countries and higher than 6.4 percent achieved in 2009-14. As per latest estimates of NSO, the annual GDP growth rates at  constant  (2011-12)  prices  during  FY  2018-19  and  FY  2019-20  stood  at  6.1  per  cent  (First  Revised Estimates)  and  4.2  per  cent  (Provisional  Estimates)  respectively.  The  deceleration  in  the  growth  rate  of GDP in FY 2019-20 coincided with a deceleration in growth of global output from 3.6 percent in 2018 to 2.9 percent  in  2019  as  estimated  in  the  World  Economic  Outlook  (WEO),  update  June,  2020  published  by International  Monetary  Fund  (IMF).  Owing  to  policies  implemented  by  Government  in  2019,  the  Indian economy had rebounded in the months of January and February of 2020 to register high growth rates in Index of Industrial Production, Index of Eight-core Industries and exports. However, the growth momentum got disrupted with the COVID-19 outbreak which struck India late in the fourth quarter of 2019-20.
- (b) As per the Estimates of Gross Domestic Product (GDP) for the First Quarter (Q1) of 2020-21 released by the National Statistical Office on 31 st August 2020, the real GDP in India contracted by 23.9 per cent

during the first quarter of 2020-21. During this quarter, India enforced one of the most stringent lockdowns as reflected in the Government Response Stringency Index measured by Oxford University. The contraction in GDP is consistent with the effect of the stringent lockdown.

(c) Soon after the outbreak of novel coronavirus on 7 th January, 2020, several measures like progressive tightening of international travel, issuing advisories for members of the public, setting up quarantine facilities etc. were taken by the Government to contain the spread of COVID-19. World Health Organization (WHO) declared COVID-19 as a pandemic on 11 th March, 2020. During the period from 16 th to 23 rd March, 2020, most of the State Governments/UTs resorted to partial or full lockdown in their respective State/UT based upon their assessment of the situation. Taking into consideration the high infection rate of COVID-19, need for effective measures of social distancing as advised by experts, the global experience in containment of the  spread  of  the  virus  and  the  need  for  consistency  in  the  approach  and  implementation  of  various containment measures across the country, a nationwide 21-day lockdown was announced on 24 th March, 2020 to contain the spread of COVID-19 in the country under the Disaster Management Act, 2005.

(d)  to  (f)  India's  response  to  COVID-19  has  been  pre-emptive,  pro-active  and  graded.  The  approach  of combating  the  pandemic  was  changed  from  'Jaan  hai  toh  Jahaan  Hai'  to  'Jaan  Bhi  Jahaan  Bhi',  after ramping up health infrastructure during the lockdown period that was critical to saving lives. The country entered the lockdown period after Government constituted a COVID-19 Economic Response Task Force on 19 th March,  2020  to  implement  economic  recovery  measures  in  consultation  with  all  stakeholders. Government announced Pradhan Mantri Garib Kalyan Yojana to provide emergency relief measures to the vulnerable sections of the population followed by a special economic and comprehensive Aatma Nirbhar Bharat package of Rs. 20 lakh crore-equivalent to 10 percent of India's GDP. The package includes, among others,  relief  measures  under  the, Pradhan  Mantri  Garib  Kalyan Rojgar  Abhiyaan,  relief  measures  for MSMEs and NBFCs, increased allocation  under  MGNREGS,  interest  subvention  for  MUDRA  loans  and revamp of Viability  Gap  Funding  scheme for  social  infrastructure.  The  implementation  of  the  package  is reviewed and monitored regularly.

With the phased unlocking of the Indian economy since June 1, 2020, high frequency economic indicators like  PMI  Manufacturing,  index  of  eight  core  industries,  E-way  bills,  Kharif  sowing,  power  consumption, railway freight, cargo traffic and passenger vehicle sales have recovered in the months of July, August and September and indicate growing convergence with previous year's activity levels.