Lok Sabha Question No. 5088 (UNSTARRED), answered on 2023-04-03
Subject: Investment Risks and Macroeconomic Problems of Indian Economy
Ministry: FINANCE
Asked by: Kani K. Navas

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

## LOK SABHA UNSTARRED QUESTION NO. 5088

DUE FOR ANSWERED ON APRIL 3, 2023

## INVESTMENT RISKS AND MACROECONOMIC PROBLEMS OF INDIAN ECONOMY

5088. SHRI K. NAVASKANI:

Will the Minister of FINANCE be pleased to state:

- (a) whether  the  Government  has  taken  cognizance  of  reported  big  investment risks,  strong  policy  inwardness  and  large  macroeconomic imbalances prevailing in the country and if so, the details thereof and the reaction of the Government thereto; and
- (b) if so, the remedial steps proposed to be taken by the Government, keeping in mind that the country's economy is likely to touch $7tn by 2030?

## ANSWER

## MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI PANKAJ CHAUDHHARY)

(a)-(b): After  the  twin  shocks  of  the  COVID-19  pandemic  and  the  geo-political conflict,  the  global  economy  has  been  slowing  while  global  inflation  remains elevated. This has impacted the Indian economy as well. Yet India continues to be the fastest-growing major economy in the World, with low inflation. India's real GDP growth is estimated to grow at 7 per cent in 2022-23, while inflation has been on a declining trend during the year, gradually nudging below 6 per cent. Policy support over the last eight years has contributed to the high growth of the Indian economy.

Policy  support  has  included  the  introduction  and  application  of  the  Insolvency  and Bankruptcy Code (IBC), Goods and Services Tax Reform, cut in the Corporation Tax Rate,  the  Make  in  India  and  Start-up  India  strategies,  and  Production  Linked Incentive Schemes, among others. Sensing that the pandemic and the geo-political conflict  will  increase  economic  uncertainty  and  increase  investment  risks,  the Government of India increased its capital investment outlay substantially during the last three years. This not only supported growth but also attracted investment from the private sector.

India has also shown policy openness by helping needy countries with medical kits and vaccination doses to fight the pandemic. Various measures announced to attract FDI and positive responses thereto by foreign investors also reflect policy openness in  India.  While  maintaining  high  growth,  India  has  been  able  to  reduce  inflation through  calibrated  intervention  by  the  RBI  and  specific  measures  taken  by  the Government  to  improve  supplies. This  has  resulted  in  the  strengthening  of  the macroeconomic balance, which has been further supported by the declining level of public debt in relation to GDP, and the narrowing current account deficit following a cut in inessential imports and an increase in service exports.

The Union budget 2023-24 has taken further steps to sustain a high growth of India's economy. These include a substantial increase in capital investment outlay for the third  year  in  a  row  by  33  per  cent  to  ₹10  lakh  crore  (3.3  per  cent  of  GDP),  the enhanced  outlay  for  PM  Awas  Yojana,  the  launch  of  the  Aspirational  Blocks Programme  covering  500  blocks  for  saturation  of  essential  government  services; increase  in  agriculture  credit  target  to  ₹20  lakh  crore  with  a  focus  on  animal husbandry,  dairy  and  fisheries;  and  setting  up  of  Agriculture  Accelerator  Fund  to encourage  agri  start-ups  by  young  entrepreneurs  in  rural  areas,  among  others. Direct  capital  investment  by  the  Centre  is  also  complemented  by  Grants-in-Aid  to States for the creation of capital assets. The 'Effective Capital Expenditure' of the Centre was accordingly budgeted at 13.7 lakh crore (4.5 per cent of GDP) for 202324. To increase private investment in infrastructure, the newly established Infrastructure Finance Secretariat will provide oversight. Further, to improve logistics performance, one hundred critical transport infrastructure projects for last and firstmile connectivity for ports, coal, steel, fertilizer, and food grains sectors have been identified and will be prioritised for development.

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