Lok Sabha Question No. 2210 (UNSTARRED), answered on 2015-12-11
Subject: International Agency Report on Economic Growth
Ministry: FINANCE
Asked by: RATTAN LAL KATARIA

- (a) whether International Rating agencies have indicated higher economic growth rate for the Indian economy;
- (b)  if so, the details thereof; and
- (c)  the various economic measures initiated by the Government to stabilize inflation, improve the regulatory environment, increase infrastructure investment, lower fiscal deficit and kickstart export growth and investment along with the outcome thereof?

## ANSWER

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

(a & b): Credit rating agencies like Dominion Bond Rating Services (DBRS), Fitch and Moody's are optimistic about the growth prospects for the Indian economy. As per the DBRS report of 5.11.2015, in the near term, growth is set to gradually accelerate in an environment characterized by low inflation and sound external account. As per the Fitch ratings report of 4.12.2015, India's positive GDP growth outlook stands out globally. Fitch forecasts India's real GDP growth to increase to 7.5 per cent in 2015-16 and 8.0 per cent in 2016-17, supported by the government's capital spending and gradual implementation of broad-based structural reforms.

(c):  The  Government of India has taken various initiatives to accelerate investment in general, and infrastructure  investment in particular, which include; fillip through higher public  investment  and  fiscal  incentives;  reforms  and  liberalization  of  foreign  direct investment in important sectors; Skill India and Digital India initiatives; measures to debottleneck the supply of key raw-materials like coal; 'Make in India' initiative along with the  attendant  facilitatory  measures  for  a  more  conducive  environment  for  investment; launching  of  Micro  Units  Development  and  Refinance  Agency  Ltd.  (MUDRA);   and, measures to improve clarity and transparency in economic policy-making. Government has  been  following  a  policy  of  progressive  reduction  in  fiscal  deficit  with  focus  on expenditure reforms including plugging of leakages in public delivery and direct benefit transfer  and  rationalization  of  tax  structure.  The  Government's  measures  to  curb inflation, particularly food inflation, inter alia, include: measures to increase the domestic availability of pulses; ban on export of selected pulses; suspension of the future trading in urad and tur; freedom to import pulses without quantitative restrictions and reduction in  the  import  duty  on  pulses;  operationalizing  Price  Stabilisation  Fund  (PSF)  Scheme and, buffer stocking of pulses. To promote exports, the five-year Foreign Trade Policy (FTP) 2015-20 was announced on April 1, 2015 which complements the initiatives like 'Make  in  India',  'Digital  India'  and  'Skills  India'  through  a  framework  that  harmonizes incentive structure  for exports, promotes domestic value addition and trade facilitation with enhanced ease of business as the key focus areas.

These measures have resulted in an increase in the growth rate of GDP  at constant market prices from 7.0 per cent in the first quarter (Q1) of 2015-16 to 7.4 per cent in the second quarter (Q2) of 2015-16. Similarly, the growth rate of fixed investment increased from 4.9 per cent in Q1 of 2015-16 to 6.8 per cent in Q2 of 2015-16. The headline WPI inflation declined from 6 per cent in 2013-14 to 2 per cent in 2014-15 and further to (-) 3.5 per cent in 2015-16 (April-October). Inflation measured in terms of Consumer Price Index (New series) also declined to 5.9 per cent in 2014-15 from around 9-10 per cent in the previous two years. It declined further to 4.6 per cent in 2015-16 (April-October). Fiscal deficit during April-October 2015 has been Rs. 411246 crore, which is lower than the level of Rs.475751 crore recorded during the corresponding period of the previous year.  During  2015-16  (April-October),  trade  deficit  decreased  to  US$  77.8  billion  as against US$ 86.3 billion in the corresponding period of previous year. The initiatives of the Government to improve the regulatory framework and strengthen regulatory bodies are contributing to improvement in the financial and economic outcomes.

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