Lok Sabha Question No. 106 (STARRED), answered on 2020-02-10
Subject: Economic Growth Forecast
Ministry: FINANCE
Asked by: Abdul Khaleque, Sougata Ray

## GOVERNMENT OF INDIA MINISTRY OF FINANCE

## DEPARTMENT OF ECONOMIC AFFAIRS

## LOK SABHA STARRED QUESTION NO. 106

TO BE ANSWERED ON FEBRUARY 10, 2020

## ECONOMIC GROWTH FORECAST

*106. SHRI ABDUL KHALEQUE: PROF. SAUGATA RAY:

Will the Minister of FINANCE be pleased to state:

- (a) the sectors which have taken the hit of the sliding growth rate;
- (b) whether the Government proposes to share its plan to arrest the slide of growth rate;
- (c) whether the International Monetary Fund (IMF) has recently slashed India's growth forecast to 4.8 per cent and if so, the reaction of the Government thereto;
- (d) whether the projection of IMF is likely to cause stress in the non-bank financial sector and weak rural income growth and if so, the details thereof; and
- (e) the manner in which the Government proposes to steer the economy on a growth path?

## 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. 106 BY SHRI ABDUL KHALEQUE AND PROF. SAUGATA RAY

## DUE FOR ANSWER ON FEBRUARY 10, 2020

…..

(a) to (e): India's growth trajectory over the period 2014-15 to 2018-19 is characterized by macroeconomic  stability  with  real  GDP  growth  averaging  7.4  per  cent.  As  per  National Statistical Office's First Advance Estimates of National Income, 2019-20, India's real GDP is estimated  to  grow  at  5.0  percent  in  2019-20.  World  Economic  Outlook  Update  (January 2020) published by the International Monetary Fund (IMF) has revised India's GDP growth rate to 4.8 per cent in 2019. This revision in growth may not cause any stress in the  NonBanking Financial Companies (NBFCs) sector as NBFCs are well capitalized.

The moderation in India's growth coincides with a deceleration in growth of global output, as estimated by IMF, in recent years. IMF has projected India's GDP growth to pick up to 5.8  per  cent  in  2020.  Economic  Survey  2019-20  has  also  projected  a  pick-up  in  India's growth  in  the  range  of  6.0  per  cent  to  6.5  per  cent  in  2020-21.  RBI's  Sixth  Bi-Monthly Monetary  Policy Statement, 2019-20  has  also  projected  GDP growth  of 6.0  per cent  for 2020-21.

Government  has implemented several major structural reforms in recent  years to  bolster investment and growth. These, inter-alia , include Insolvency and Bankruptcy Code (IBC) to strengthen  the  financial  system,  Goods  and  Services  Tax  (GST)  to  simplify  the  indirect taxation  regime,  Make-in-India  programme  to  boost  domestic  manufacturing  capacity, liberalization  of  Foreign  Direct  Investment  (FDI)  and  Jan  Dhan-Aadhaar-Mobile  (JAM) Trinity  towards  greater  transparency,  efficiency  and  financial  inclusion.  Recently,  the corporate tax rate has been cut to 15 per cent for new domestic manufacturing companies, which  is  amongst  the  lowest  in  the  world.  In  December  2019,  the  government  has announced  the  ₹103 lakh crore  National Infrastructure Pipeline  which  would significantly boost infrastructure and spur growth impulses in the economy. Union Budget 2020-21 has also  announced  a  number  of  measures  to  support  broad-based  and  inclusive  economic development.  These, inter-alia ,  include  rationalization  of  personal  income  tax  rates  to support domestic demand, a 16-point action plan for holistic development of the agriculture sector and critical measures to boost infrastructure and rural spending. The improvement in growth and the measures announced in the Union Budget 2020-21 are expected to further strengthen the non-bank financial sector and promote rural income growth.