Lok Sabha Question No. 73 (STARRED), answered on 2015-07-24
Subject: Impact of Greek Crisis
Ministry: FINANCE
Asked by: MANOJ RAJORIA, CHANDRA PRAKASH JOSHI

(a)  whether  the  Government has made an assessment of the recent Greek crisis and its possible impact on the Indian economy; (b)  if  so,  the  details  thereof  and  the  sectors/areas  of  the  economy  likely  to  be affected; (c) the steps taken by the Government to protect and  boost the Indian economy, the credibility  of  Foreign  Institutional  Investors  (FIIs)  and  to  ease  pressure  on  capital investment in case of increased interest rates in Europe; (d) whether there has been a surge in the external and Domestic debt of India, if so, the details thereof during the last three years and the current year; and (e)  whether  the  surge  in  the  aforesaid  debt  may  have  an  adverse  impact  on  the Indian economy, if so, the details thereof and the preventive steps taken/proposed to

- be taken by the Government in this regard?

## ANSWER

FINANCE MINISTER (SHRI ARUN JAITLEY)

(a) to (e):  A Statement is laid on the Table of the House.

## STATEMENT REFERRED TO IN REPLY TO LOK SABHA STARRED QUESTION NO. 73 BY DR. MANOJ RAJORIA AND SHRI CHANDRA PRAKASH JOSHI DUE FOR ANSWER ON JULY 24, 2015

- (a) and (b):  As per the assessment of the Government, the Greece crisis is not likely to directly  impact  the  Indian  economy  in  any  significant  measure,  as  India  has  low exposure (less than 0.3 percent of total)  to trade, remittances and capital flows with

Greece. reforms and  rationalization of tax structure; fillip to industry

(c)The Government of India has taken various initiatives to improve the growth rate of the economy. These include fiscal reforms with emphasis on consolidation, expenditure and  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; 'Make in India' initiative along with the attendant facilitatory measures; and, various measures to improve clarity and transparency in economic policy-making. As regards improving the credibility of foreign institutional Investors,  Securities Exchange Board of India (SEBI) notified the Foreign Portfolio Investor (FPI) Regulations in 2014 and operationalized the FPI regime with an objective for rationalizing various foreign portfolio investment routes and simplifying the procedures.

- (d) There has been a marginal increase in combined total liabilities of Centre and States and external debt in nominal terms in the recent years. However, in terms of proportion to the GDP, the share of combined total liabilities of Centre and States has remained stable  at  about  66  percent  during  the  period  March  2012  to  March  2014.  As  on  end March  2015,  the  total  liabilities  of  the  Central  Government  was  Rs.64,144,22  crore, which constituted 51 per cent of the GDP. The share of external debt has also remained stable and was below 25 percent of GDP during last four years. The details of external and internal debt are given below:
- (e)  The  Government  has  reverted  to  the  path  of  fiscal  consolidation  with  gradual  exit from  the  expansionary  measures  in  a  calibrated  manner.  The  proposed  reduction  in fiscal deficit to 3.9 per cent of GDP in Budget Estimates 2015-2016 is designed with a mix of reduction in total expenditure as percentage of GDP and improvement in gross tax revenue as percentage of GDP. As regards external debt, a number of steps have been  taken  to  reduce  the  vulnerability.  These  include:  liberalisation  of  rupee  external debt and taking steps to create a more liquid domestic bond market for both Government and Corporates.

Table:  India-Combined Liabilities of Centre and States and External Debt

|   End March | Combined total liabilities of Centre & States ( Rs. in crore)   | Combined liabilities of Centre & states as proportion of GDP (%)   |   External Debt (Rs. in crore) |   External Debt as proportion of GDP (%) |
|-------------|-----------------------------------------------------------------|--------------------------------------------------------------------|--------------------------------|------------------------------------------|
|        2012 | 5870555                                                         | 66.5                                                               |                        1844167 |                                     20.9 |
|        2013 | 6564436                                                         | 65.7                                                               |                        2224733 |                                     22.3 |
|        2014 | 7499192                                                         | 66.1                                                               |                        2682752 |                                     23.6 |
|        2015 | NA                                                              | NA                                                                 |                        2978666 |                                     23.8 |

Source: RBI      NA=Not Available