Lok Sabha Question No. 174 (UNSTARRED), answered on 2020-02-03
Subject: Economic Slowdown
Ministry: FINANCE
Asked by: Rajiv Ranjan (Lalan) Singh, Suresh Kodikunnil, Mala Roy, Anto  Antony, K. Muraleedharan

## GOVERNMENT OF INDIA MINISTRY OF FINANCE LOK SABHA

## UNSTARRED QUESTION NO. 174

ANSWERED ON 03.02.2020

## ECONOMIC SLOWDOWN

174.  SHRI RAJIV RANJAN SINGH ALIAS LALAN SINGH: SHRI KODIKUNNILSURESH: SHRIMATI MALA ROY: SHRI ANTO ANTONY: SHRI K.MURALEEDHARAN:

Will the Minister of FINANCE be pleased to state:

- (a)  whether the country is facing financial slowdown and if so, the details thereof and the reasons therefor, sector wise along with the sectors worst affected thereby;
- (b)  whether  it  is  true  that  there  is  an  alarming  situation  on  current  consistent  decline  in  Gross Domestic Product (GDP) and the same is expected to decrease further and if so, the details thereof along with the present status of GDP growth in the country;
- (c)  whether  experts  are  indicating  that  recovery  will  take  time  only  if  proper  steps  are  taken immediately and if so, the details thereof along with the reaction of the Government thereto;
- (d)  whether as per a report published by the State Bank of India, economic slowdown has also hit the job sector and if so, the details thereof along with the reaction of the Government thereto and remedial measures taken by the Government in this regard;
- (e)  whether US-Iran tension is putting extra burden on Indian economy and if so, the details thereof along with the reaction of the Government thereto; and
- (f)  the measures taken or being taken by the Government to address the growing economic crisis in the country?

## ANSWER

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

(a) & (b): 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.  As  per  the  IMF  estimates,  India  continues  to  be among the fastest growing economies in the world and its GDP is estimated to grow at 5.8 percent in 2020-21 and is further projected to surpass China with a growth rate of 6.5 percent in 2021-22.

As per the Provisional Estimates of Annual National Income, 2018-19 released by National Statistical Office (NSO), the growth of real Gross Domestic Product (GDP) is estimated at 7.2 per cent and 6.8 per cent in 2017-18 and 2018-19 respectively. The First Advance Estimates of National Income project the  growth  of  real  GDP  to  be  5.0  per  cent  in  2019-20.  The  deceleration  in  the  growth  rate  of  GDP coincides 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 January 2019 published by International Monetary Fund (IMF).

The sector wise growth rates of Gross Value Added (GVA) at constant (2011-12) basic prices are given in table below.

Table: Sector wise GVA growth at 2011-12 basic prices

|                                                                                      |   2017-18 1st RE |   2018-19 PE |   2019-20 1AE |
|--------------------------------------------------------------------------------------|------------------|--------------|---------------|
| Agriculture, forestry & fishing                                                      |              5   |          2.9 |           2.8 |
| Industry                                                                             |              5.9 |          6.9 |           2.5 |
| Mining & quarrying                                                                   |              5.1 |          1.3 |           1.5 |
| Manufacturing                                                                        |              5.9 |          6.9 |           2   |
| Electricity, gas, water supply & other utility services                              |              8.6 |          7   |           5.4 |
| Construction                                                                         |              5.6 |          8.7 |           3.2 |
| Services                                                                             |              8.1 |          7.5 |           6.9 |
| Trade, Hotel, Transport, Storage, communication and services related to broadcasting |              7.8 |          6.9 |           5.9 |
| Financial, real estate & professional services                                       |              6.2 |          7.4 |           6.4 |
| Public Administration, defence and other services                                    |             11.9 |          8.6 |           9.1 |
| GVA at basic prices                                                                  |              6.9 |          6.6 |           4.9 |

Source: NSO, RE: Revised Estimate, AE: Advance Estimate

(c): Economic Survey 2019-20 mentions that based on first advanced estimates of India's GDP growth for  2019-20  recorded  at  5  per  cent,  an  uptick  in  GDP  growth  is  expected  in  second  half  (OctoberMarch) of 2019-20. The government with a strong mandate is poised to deliver expeditiously on reforms and to get the economy to strongly rebound in 2020-21.

(d): SBI Ecowrap Report (Issue No. 65, FY 2020) dated 13 th January 2020, using Employees' Provident Fund Organization (EPFO) data has projected that 15.8 lakh less net new payrolls were generated in 2019-20 compared to 2018-19.  However, the same report also mentions that the EPFO data is still having some niggling doubts about the quality, which are yet to be rectified. Government has taken various  steps  for  generating  employment  in  the  country  like,  fast-tracking  various  projects  involving substantial  investment  besides    increasing  public  expenditure  on  notable  schemes  such  as  Prime Minister's Employment Generation Programme (PMEGP), Mahatma Gandhi National Rural Employment  Guarantee  Scheme  (MGNREGS),  Pt.  Deen  Dayal  Upadhyaya  Grameen  Kaushalya Yojana  (DDU-GKY)  and  Deendayal  Antodaya  Yojana-National  Urban  Livelihoods  Mission  (DAYNULM),  Pradhan  Mantri  Rojgar  Protsahan  Yojana  (PMRPY),  Pradhan  Mantri  Kaushal  Vikas  Yojana (PMKVY)  National  Career  Service  (NCS)  Project,  and  National  Apprenticeship  Promotion  Scheme (NAPS).

(e):  The World  Economic Outlook Update of January 2020  released by International Monetary Fund mentions that despite US policy on Iranian oil exports, crude oil prices have been volatile since August 2019. As of early January 2020, crude oil prices stood at around $55 a barrel, and markets expected prices  to  remain  broadly  at  that  level  over  the  next  4-5  years.  Accordingly,  no  burden  on  India's economy is expected on this count.

(f): Government has been undertaking continuous measures for improving the investment climate and boosting the economic growth rate of the 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. This is reflected in the World Bank's Ease of Doing Business 2020 Report which improves India's ranking by 14 positions from 77 in 2018 to 63 in 2019. 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.  All  along  Government  has  kept inflation  under  control,  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.