Lok Sabha Question No. 2403 (UNSTARRED), answered on 2021-12-13
Subject: Fastest Growing Economy
Ministry: FINANCE
Asked by: Prataprao  Jadhav, Sanjay Sadashivrao Mandlik, Ravi Kishan Shukla, Subrata Pathak, Shrirang Appa Barne, Sudheer Gupta, Manoj Kumar Tiwari, Ravindra Kushawaha, Bidyut Baran Mahato

SHRI RAVI KISHAN:

SHRI MANOJ TIWARI:

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

## LOK SABHA

## UNSTARRED QUESTION NO. 2403

TO BE ANSWERED ON 13.12.2021

## FASTEST GROWING ECONOMY

2403. SHRI PRATAPRAO JADHAV:

SHRI SHRIRANG APPA BARNE:

SHRI RAVINDRA KUSHWAHA:

SHRI BIDYUT BARAN MAHATO:

SHRI SANJAY SADASHIVRAO MANDLIK:

SHRI SUBRAT PATHAK:

SHRI SUDHEER GUPTA:

Will the Minister of FINANCE be pleased to state:

- (a) whether India is going to become the fastest growing major economy of the world and if so, the details thereof;
- (b) whether the Government proposes to push the growth by easing of regulations, pushing infrastructural investments, boosting manufacturing sector through Production Linked Incentive schemes, rising discretionary consumption and low interest and if so, the steps taken in this regard;
- (c) whether the Government is aware of prolonged supply constraints and input cost inflation due to Covid19 and global economic crisis;
- (d) if so, the details thereof and the efforts made by the Government to come out of such obstacles;
- (e) whether volatile prices of crude oil in international markets and costlier edible oils and metal products are still posing challenges for growing Indian economy; and
- (f)  if so, the details thereof along with the steps taken by the Government to counter such hindrance to achieve the desired goal of GDP?

## ANSWER

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

- (a) : As per IMF's World Economic Outlook (WEO), October 2021, India is projected to grow at 9.5 per cent in  2021-22  and  8.5  per  cent  in  2022-23,  fastest  growth  among  major  economies  in  both  the  years. According to RBI's latest forecast, India's real GDP is projected to grow at 9.5 per cent in FY 2021-22.
- (b):  Government  has  implemented  several  major  reforms  in  recent  years  to  boost  investment  and  GDP growth. The Government enacted the Insolvency and Bankruptcy Code (IBC) and recapitalized banks. The other  measures taken, inter-alia,  include 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. In September, 2019 the corporate tax rate was reduced to 15 per cent for new domestic manufacturing companies, which is amongst the lowest in the world. In December 2019, the government announced  the  Rs.103  lakh  crore  National  Infrastructure Pipeline which  would  significantly boost infrastructure and spur growth impulses in the economy.

In FY 2020-21, to limit the damage inflicted by the pandemic on the economy and initiate quick recovery of economic  growth  in  FY  2020-21,  Government  had  announced  a  special  economic  and  comprehensive package of Rs. 29.87 lakh crore under AtmaNirbhar Bharat (ANB) including measures announced by RBI and PM Garib Kalyan Yojana. Structural reforms were also announced as part of the ANB Package which, inter alia , included deregulation of the agricultural sector, change in definition of MSMEs, new PSU policy,  commercialization  of  coal  mining,  higher  FDI  limits  in  defence  and  space  sector,  development  of Industrial Land/ Land Bank and Industrial Information System, revamp of Viability Gap Funding scheme for social infrastructure, new  power  tariff policy and incentivizing States to undertake  sector  reforms. Emergency Credit Line Guarantee Scheme (ECLGS) was launched to provide collateral free guaranteed loans for business enterprises in various sectors affected by COVID-19.

Union  Budget  2021-22  further  announced  number  of  measures  to  support  broad-based  and  inclusive economic development including a 34.5 percent increase in capital expenditure and 137 percent increase in health expenditure. To enhance India's manufacturing capabilities and exports, an outlay of Rs. 1.97 lakh crore  (over  US$  26  billion)  was  announced  for  Production  Linked  Incentive  (PLI)  schemes  for  13  key sectors  of  manufacturing  starting from  FY  2021-22. Government also announced a relief package of Rs 6.29 lakh crore in June 2021 to strengthen public health and provide impetus for growth and employment measures.

(c)  to  (f):  According  to  IMF  Global  Commodity  price  index,  global  inflation  remains  high  with  the  all commodity index at 183.3 in November 2021, significantly higher than 115 in November 2020. Trends in price indices of all commodities including input materials like base metal, crude oil, natural gas and coal are given in the table below.

| IMF Commodity Price Index            | IMF Commodity Price Index            | IMF Commodity Price Index            | IMF Commodity Price Index            | IMF Commodity Price Index            | IMF Commodity Price Index            |
|--------------------------------------|--------------------------------------|--------------------------------------|--------------------------------------|--------------------------------------|--------------------------------------|
| Month                                | All Commodity                        | Base Metals                          | Crude Oil                            | Natural Gas Price                    | Coal Price                           |
| Jan-20                               | 119.6                                | 133.4                                | 145.1                                | 76.9                                 | 119.2                                |
| Feb-20                               | 111.0                                | 126.0                                | 126.5                                | 61.6                                 | 114.7                                |
| Mar-20                               | 93.8                                 | 120.1                                | 76.2                                 | 60.0                                 | 101.2                                |
| Apr-20                               | 83.9                                 | 115.2                                | 50.4                                 | 48.7                                 | 87.5                                 |
| May-20                               | 91.3                                 | 121.6                                | 72.3                                 | 43.6                                 | 80.5                                 |
| Jun-20                               | 99.8                                 | 132.1                                | 92.8                                 | 43.4                                 | 81.6                                 |
| Jul-20                               | 102.9                                | 139.2                                | 98.1                                 | 45.9                                 | 78.4                                 |
| Aug-20                               | 108.8                                | 148.9                                | 99.9                                 | 67.1                                 | 79.4                                 |
| Sep-20                               | 108.3                                | 152.2                                | 93.3                                 | 75.9                                 | 81.9                                 |
| Oct-20                               | 110.6                                | 151.2                                | 91.6                                 | 93.4                                 | 87.1                                 |
| Nov-20                               | 115.0                                | 158.3                                | 96.9                                 | 102.1                                | 98.9                                 |
| Dec-20                               | 125.4                                | 179.9                                | 110.1                                | 130.6                                | 127.8                                |
| Jan-21                               | 137.4                                | 189.7                                | 120.3                                | 182.9                                | 135.0                                |
| Feb-21                               | 140.5                                | 193.5                                | 136.3                                | 146.9                                | 133.7                                |
| Mar-21                               | 141.4                                | 199.0                                | 145.1                                | 110.6                                | 141.7                                |
| Apr-21                               | 144.9                                | 207.9                                | 142.9                                | 126.1                                | 141.6                                |
| May-21                               | 155.6                                | 229.7                                | 149.7                                | 152.3                                | 156.4                                |
| Jun-21                               | 161.9                                | 237.4                                | 162.3                                | 176.1                                | 183.9                                |
| Jul-21                               | 166.1                                | 237.8                                | 167.1                                | 209.9                                | 205.2                                |
| Aug-21                               | 163.8                                | 212.3                                | 157.2                                | 246.1                                | 231.3                                |
| Sep-21                               | 172.8                                | 191.5                                | 166.2                                | 345.3                                | 260.6                                |
| Oct-21                               | 192.4                                | 195.7                                | 188.5                                | 458.5                                | 338.1                                |
| Nov-21                               | 183.8                                | 179.5                                | 184.6                                | 418.7                                | 235.6                                |
| Source: IMF Primary Commodity Prices | Source: IMF Primary Commodity Prices | Source: IMF Primary Commodity Prices | Source: IMF Primary Commodity Prices | Source: IMF Primary Commodity Prices | Source: IMF Primary Commodity Prices |

To mitigate the impact of high global input cost  inflation and supply side constraints on domestic prices, Government has taken several measures. Some of these include:

Crude Oil/Petroleum Products: To check the petrol and diesel prices, Central Government has reduced Central Excise Duty on Petrol & Diesel by Rs. 5 and Rs. 10 respectively with effect from 04.11.2021. In response  many  states  governments  have  also  reduced  Value  Added  Tax  on  petrol  and  diesel. Consequently, retail prices of petrol and diesel have sobered down. As an additional measure to control prices, India has agreed to release 5 million barrels of crude oil from its Strategic Petroleum Reserves. This release will happen in parallel and in consultation with other major global energy consumers including the USA, People's Republic of China, Japan and the Republic of Korea.

Essential  Commodities: Price  situation  of  major  essential  commodities  is  being  monitored  by  the Government on a regular basis and corrective action taken from time to time.

Pulses: To control price rise in pulses, some of the measures taken by the Government include: (i) A buffer stock target of 23 lakh metric tonne (LMT) has been approved for 2021-22. Stocks are subsequently utilised for  stabilizing  prices  through  Open  Market  sales  (ii)  Government  has  also  imposed  stock  limits  on  some pulses under the Essential Commodities Act, 1955 in July 2021 to prevent hoarding. (iii) Changes have been made in the import policy by keeping Tur and Urad under 'free' category till 31st December, 2021.  (iv) Basic import duty and Agriculture Infrastructure and Development Cess on Masur have been brought down to zero and 10% respectively. (v) Additionally, 5-year Memorandum of Understanding (MoUs) have been signed with Myanmar for annual import of 2.5 LMT of Urad and 1 LMT of Tur, and with Malawi for annual import of 0.50 LMT of Tur and MoU with Mozambique for annual import of 2 LMT Tur has been extended for another 5 years.

Edible Oils: To soften the prices of edible oils, tariffs on edible oils have been rationalized and stock limits imposed upto a period of March 31, 2022, to avoid hoarding. National Mission on Edible Oils- Oil Palm has been approved with a financial outlay of Rs.11,040 crore to encourage domestic production and availability of oil palm.

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