Lok Sabha Question No. 3185 (UNSTARRED), answered on 2015-08-07
Subject: Annual Growth Projection of India
Ministry: FINANCE
Asked by: PREM SINGH CHANDUMAJRA, ANANT KUMAR DATTATREYA HEGDE, J.C. DIVAKAR REDDY, KAUSHALENDRA KUMAR

- (a) whether the Reserve Bank of India (RBI) and the International Monetary Fund (IMF) have made varying assessments about the annual growth projection of India during the current financial year 2015-16;
- (b) if so, the details thereof and the reasons therefor;
- (c) whether the Government has assessed the estimated Growth rate to be 8% during the aforesaid fiscal year, if so, the details thereof;
- (d)  whether  the  Government  proposes  to  achieve  double  figure  growth  rate  in  the coming  financial  years,  if  so,  the  details  thereof,  along  with  the  steps  taken  by  the Government in this regard; and
- (e)  the  likely  spill  over  effect  of  the  above  growth  rate  on  Opportunities,  Income  and employment scenario of the rural and urban areas of the country?

## ANSWER

## MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI JAYANT SINHA)

(a  &  b):  The  Reserve  Bank  of  India  (RBI)  in  their  Third  Bi-monthly  Monetary  Policy Statement, 2015-16, released on August 4, 2015 has projected that the output growth of India in 2015-16 is expected to be 7.6 per cent. The RBI has based its projection on its assessment of factors like weaker commodity prices including that of oil, possible stepup  in  agricultural  activity,  etc.  Some  factors  like  downward  revision  in  global  growth projections for 2015 with a bearing on export contraction, continuing supply constraints despite improvement in the state of  stalled projects and subdued investment demand may  act  as  constraints  for  achieving  higher  growth  rate.  The  International  Monetary Fund, in their World Economic Outlook, April 2015, projected India's growth for 2015-16 at  7.5  per  cent  indicating  that  growth  will  benefit  from  recent  policy  reforms  and consequent pickup in investment, and lower oil prices which will raise real disposable incomes,  particularly  among  poorer  households,  and  help  drive  down  inflation.  IMF's World Economic Outlook Update, July 2015, maintained the projection for India's growth for 2015-16 at 7.5 per cent.

- (c) According to the Economic Survey 2014-15, the growth in the Indian economy can be expected to be in the range of 8.1 to 8.5 per cent in 2015-16. This expectation was based on the possible growth-promoting effect of recent reforms, decline in oil prices, decline  in  inflation  and  resulting  monetary  easing  and  the  forecast  for  a  normal monsoon.

(d) Accelerating the rate of economic growth in the coming financial years, from the rate of  7.3  per  cent  achieved  in  2014-15,  is  high  on  the  agenda  of  the  Government.  The Government  of  India  has  taken  various  initiatives  to  improve  the  growth  rate  of  the economy  which, inter  alia ,  include;  fillip  to  manufacturing  and  infrastructure  through fiscal incentives and concrete measures for transport, power, and other urban and rural infrastructure;  liberalization  of  foreign  direct  investment  in  selected  sectors;  Skill  India and Digital India initiatives; measures to de-bottleneck the supply of key raw-materials like  coal  which  would  help  manufacturing  and  infrastructure  sectors;  'Make  in  India' initiative along with the attendant facilitatory measures for a more conducive environment  for  investment;  financial  inclusion  though  'Pradhan  Mantri  Jan  Dhan Yojana'  which  also  helps  to  strengthen  banking  and  insurance  services;  boost  to agricultural sector with focus on micro irrigation, watershed development, soil conservation and credit, and, various measures to improve clarity and transparency in economic  policy-making.  Fiscal  reforms  with  emphasis  on  consolidation,  expenditure reforms and rationalization of tax structure, including initiatives on Goods and Services Tax, are also expected to contribute to higher growth.

(e)  The Government has taken a balanced approach, in its efforts to step up growth, giving due consideration to the requirements of urban and rural areas, so as to improve the  quality  of  life  of  people.  Higher  growth  can  be  expected  to  increase  employment opportunities and incomes both in urban and rural areas.

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