Lok Sabha Question No. 209 (UNSTARRED), answered on 2020-02-03
Subject: Indian Economy
Ministry: FINANCE
Asked by: Kaushalendra Kumar, Vinayak Bhaurao Raut

## GOVERNMENT OF INDIA MINISTRY OF FINANCE LOK SABHA UNSTARRED QUESTION NO. 209 ANSWERED ON 03.02. 2020

## INDIAN ECONOMY

## 209. SHRI KAUSHALENDRA KUMAR: SHRI VINAYAK RAUT:

Will the Minister of FINANCE be pleased to state:

- (a)  whether  India's  economy  is  in  a  difficult  phase  due  to  recession  and  most  of  the  international agencies have also confirmed this and if so, the details thereof;
- (b)  whether  the  industrial  production  has  declined  further  by  around  1.1  per  cent  during  the  last  two months which is at its lowest point during the last six years and if so, the details thereof;
- (c) whether the coal, real-estate, power, mining, automobiles, steel sectors of Indian economy are also on the verge of recession and if so, the details thereof;
- (d) whether the prices of essential commodities have shot up and the prices of vegetables and fruits are also rising rapidly in the market and if so, the details thereof;
- (e)  the  details  of  effective  and  corrective  steps  taken  or  proposed  to  be  taken  by  the  Government  to tackle this recession so as to re-strengthen India's economy; and
- (f)  whether  it  is  true  that  the  steps  being  taken  by  the  Government  are  not  helping  the  economy  to overcome recession and if so, the details thereof and the reasons therefor?

## ANSWER

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

(a): No Sir, the economy is not in recession. As per the National Statistical Office (NSO), GDP growth on average was 7.5 percent in 2014-19, 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.

(b): The growth in Index of Industrial Production (IIP) has improved as it registered a positive growth of 1.8 per cent in November 2019 as compared to a contraction of 4.0 per cent in October 2019 and 4.3 per cent in September 2019. Contraction in September 2019 was the lowest point in last six years.

(c): Trends for coal, real-estate, power, mining, automobiles, steel sectors of Indian economy are given in Table 1 & 2 below, which do not indicate recession.

Table 1: Quarterly growth in Gross Value Added (GVA) at Constant Prices (per cent)

|                                                | 2018-19                             | 2018-19                             | 2018-19                             | 2019-20                             | 2019-20                             | 2019-20                             |
|------------------------------------------------|-------------------------------------|-------------------------------------|-------------------------------------|-------------------------------------|-------------------------------------|-------------------------------------|
|                                                | Q1                                  | Q2                                  | Q3                                  | Q4                                  | Q1                                  | Q2                                  |
| Financial, real estate & professional services | 6.5                                 | 7.0                                 | 7.2                                 | 9.5                                 | 5.9                                 | 5.8                                 |
| Source: National Statistical Office            | Source: National Statistical Office | Source: National Statistical Office | Source: National Statistical Office | Source: National Statistical Office | Source: National Statistical Office | Source: National Statistical Office |

Table 2: Annual growth rates of selected sectors as per Index of Industrial Production (IIP) and Index of Eight Core Industries (in per cent)

| Period                                             | Coal                                               | Steel                                              | Electricity                                        | Mining                                             | Manufacture of motor vehicles, trailers and semi-trailers   |
|----------------------------------------------------|----------------------------------------------------|----------------------------------------------------|----------------------------------------------------|----------------------------------------------------|-------------------------------------------------------------|
| 2016-17                                            | 3.2                                                | 10.7                                               | 5.8                                                | 5.3                                                | 0.6                                                         |
| 2017-18                                            | 2.6                                                | 5.6                                                | 5.4                                                | 2.3                                                | 12.6                                                        |
| 2018-19                                            | 7.4                                                | 5.1                                                | 5.2                                                | 2.9                                                | 7.2                                                         |
| 2019-20 (April-Nov.)                               | -5.3                                               | 5.2                                                | 0.8                                                | -0.1                                               | -16.5                                                       |
| Source: MoSPI and Office of Economic Adviser, DIPP | Source: MoSPI and Office of Economic Adviser, DIPP | Source: MoSPI and Office of Economic Adviser, DIPP | Source: MoSPI and Office of Economic Adviser, DIPP | Source: MoSPI and Office of Economic Adviser, DIPP | Source: MoSPI and Office of Economic Adviser, DIPP          |

(d):  Food  inflation  as  indicated  by  Consumer  Food  Price  Index  (CFPI)  has  shown  an  uptick  and  has increased to 5.3 per cent in 2019-20 (April-December) from 0.5 per cent in 2018-19 (April-December). The inflation in vegetables has increased to 17.6 percent 2019-20 (April-December) from (-) 4.4 per cent in  2018-19  (April-December).  The  inflation  in  fruits  is  lower  at  (-)  0.5  per  cent  in  2019-20  (AprilDecember) as compared to 4.8 percent in the corresponding period of previous year.

(e) to (f): Government has been undertaking continuous measures for improving the overall 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.

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