Lok Sabha Question No. 1589 (UNSTARRED), answered on 2016-03-04
Subject: Economic Slowdown
Ministry: FINANCE
Asked by: SRIRAM MALYADRI, DUSHYANT SINGH

- (a) whether there has been a significant adverse effect on the Indian economy due to slowdown of Chinese economy and devaluation of Yuan;
- (b) if so, the details thereof including those economic sectors which are the most affected;
- (c) the details of the corrective measures taken by the Government to support the affected industries/sectors in order to encourage the investment under such adverse conditions;
- (d) whether the Government expects to meet the target annual growth rate set for 2015-16 and if so, the details thereof; and
- (e) the steps taken by the Government to boost Indian economy?

## ANSWER

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

(a)  and  (b):  The  World  Economic  Outlook  Update  of  the  International  Monetary  Fund (January 2016) indicated that the slowdown and rebalancing of the Chinese economy and turbulence in their financial markets including depreciation of their currency could have an impact on the growth outcome of the Emerging Market and Developing economies. The impact  of  global  developments  can  be  assessed  through  trade,  commodity  prices  and financial channels. While exports have slowed, imports have also slowed considerably on account of global commodity prices declining significantly. As per the advance estimates of the Central Statistics Office, India's growth rate is estimated to have picked up from 7.2 per cent in 2014-15 to 7.6 per cent in 2015-16, with net exports making a positive contribution to  growth.  The  rupee  weakened  on  account  of  rise  of  US  dollar  globally;  however,  the Indian currency has been relatively stable on an annual average basis in 2015-16.

Due  to  sluggish  global  demand  for  steel,  in  particular  in  China,  major  global  steel producers are pushing steel products into  different  markets. There  has  been a  surge  in steel imports. The slowdown in China has also resulted in a sharp fall in commodity prices, and India, being the major importer of oil and other minerals, has benefited from softer oil and commodity prices.

(c)  Government  has  taken  various  steps  to  protect  the  domestic  steel  industry  which, among other measures, include: imposition of minimum import price condition on various steel products; imposition of anti-dumping duty for specific grades of steel imported from certain  countries;  imposition  of  safeguard  duty  on  certain  products;  raising  the  basic customs duty on specified items; and, measures to increase availability of coal and iron ore for the domestic steel industry. The investment facilitation measures introduced by the Government under the Make-in-India Initiative are expected to give a boost to investment in different sectors.

(d)  Government  has not fixed  any  target  for  GDP  growth  for  2015-16.  Central  Statistics Office has estimated the growth rate in GDP at constant market prices in 2015-16 to be 7.6 per cent (Advance Estimates).

(e)  The  Government  of  India  has  taken  various  initiatives  to  boost  the  growth  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;  reforms  and  liberalization  of  foreign  direct  investment  in  major  sectors; measures  to  debottleneck  the  supply  of  key  raw  materials;  Skill  India  and  Digital  India initiatives;  'Make  in  India'  initiative  along  with  the  attendant  facilitatory  measures  for  a more conducive environment for investment; Start-up India initiative to boost entrepreneurship  and    creation  of  jobs;  and,  various  measures  to  improve  clarity  and transparency in economic policy-making. The other measures like; financial inclusion and boost to household financial savings though Pradhan Mantri Jan Dhan Yojana; launching of  Micro  Units  Development  and  Refinance  Agency  Ltd; 'Stand  Up  India  Scheme'  to promote entrepreneurship among SC/ST and women entrepreneurs; are also expected to promote  growth.  The  Budget  2016-17  continued  the  Government's  growth  promoting agenda  with  many  measures  which,  among  others,  include:  continued  push  to  boost domestic demand; measures to improve agricultural growth and rural infrastructure; timebound plans for rural electrification and connectivity; push to infrastructure development; efforts  to  promote  manufacturing  with  rationalization  in  customs  and  excise  duty  rates; further  rationalization  of  FDI  policy  in  various  sectors;  and,  improving  the  ease  of  doing business for start-ups.

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