Lok Sabha Question No. 1222 (UNSTARRED), answered on 2020-02-10
Subject: Growth Forecasts by International Bodies
Ministry: FINANCE
Asked by: H. Vasanthakumar, Andimuthu Raja, Pradyut Bordoloi

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

## LOK SABHA UNSTARRED QUESTION NO. 1222

TO BE ANSWERED ON FEBRUARY 10, 2020

## GROWTH FORECASTS BY INTERNATIONAL BODIES

1222. SHRI VASANTHAKUMAR H.: SHRI A. RAJA: SHRI PRADYUT BORDOLOI:

Will the Minister of FINANCE be pleased to state:

(a) whether the Government is aware that international bodies like the International Monetary Fund and the World Bank, among others, have reduced their growth forecasts for India for the current fiscal;

(b)  if so, the details thereof and the reasons therefor;

(c) whether there is a sharper-than-expected slowdown in local demand and stress in the non-bank financial sector and if so, the details thereof;

(d) whether the Government anticipates a decline in investor sentiment as a result of this and if so, the details  thereof; and

(e)  the  measures  taken  by  the  Government  to  raise  India's  economic  growth  and  address  its  adverse  impact  in  all spheres?

## ANSWER

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

(a) & (b): World Economic Outlook Update (January 2020) published by International Monetary Fund (IMF) has estimated India's  Gross  Domestic  Product  (GDP)  growth  rate  at  4.8  per  cent  in  2019.  The  World  Bank  in  its  Global  Economic Prospects published in January 2020 has estimated India's GDP growth rate at 5 per cent in 2019. The moderation 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 by IMF. As per IMF and World Bank, India's GDP growth is projected to pick up to 5.8 per cent in 2020-21.

(c): As per the first revised estimates published by National Statistical Office (NSO), the growth of private consumption expenditure was estimated at 7.2 per cent in 2018-19. The growth of private consumption expenditure is projected at 5.8 percent in 2019-20 as per the first advance estimates of GDP. The Financial Stability Report December 2019 by Reserve Bank of India (RBI) estimates that the gross Non Performing Asset (NPA) ratio of the Non-Bank Financial Companies (NBFC) sector increased slightly from 6.1 per cent as at end March 2019 to 6.3 per cent as at end September 2019. The NBFCs are however well capitalised with a Capital to Risk Weighted Assets Ratio (CRAR) of 19.5 per cent in September 2019,  well  above  the  prescribed  norm  of  15  per  cent.  The  Government  and  the  RBI  have  taken  several  measures  to strengthen the sector.

(d) & (e): The Government anticipates an improvement in investor sentiment as a result of several measures taken 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 DhanAadhaar-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.