GOVERNMENT OF INDIA
Ministry of Finance
DEPARTMENT OF ECONOMIC AFFAIRS
UNSTARRED QUESTION NO. 840
ANSWERED ON MARCH 5, 2013 / PHALGUNA 14, 1934 (SAKA)
Lowering of Projected Growth Rate of Country
840. SHRI RAJEEV CHANDRASEKHAR:
Will the Minister of FINANCE be pleased to state;
(a) whether Government's attention has been drawn to recent reports by the International Monetary Fund (IMF) and the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP), which have slashed India's growth projection to 4.9 per cent from its earlier projection of 6.2 per cent and 5.9 per cent respectively, for the year 2012-13;
(b) whether the Central Statistical Organization (CSO) has also pegged the growth rate at a ten-year low of 5 per cent; and
(c) if so, the reasons for this sharp and abrupt decline in the economy and the steps that Government is taking in this regard?
MINISTER OF STATE IN THE MINISTRY OF FINANCE
(SHRI NAMO NARAIN MEENA)
(a) According to the World Economic Outlook (WEO) update published by the IMF in January 2013, growth rate of India's Gross Domestic Product (GDP) at market prices is estimated to be 4.5 per cent and 5.9 per cent in 2012 and 2013 respectively. As per the Year end Update of the 'Economic and Social Survey of Asia and the Pacific 2012' published by the UNESCAP, the growth rate of India’s GDP is estimated to be 5.9 per cent in 2012 and 6.8 per cent in 2013.
(b) & (c) As per the Advance Estimates released by the Central Statistics Office (CSO), the growth rate of GDP (at factor cost at constant 2004-05 prices) is estimated to be 5.0 per cent in 2012-13. The slowdown in growth in 2012-13 is on account of lower growth in agriculture, industry and the services sector. The slowdown is attributable to both domestic factors as well as the uncertain global economic environment. Among domestic factors, the tightening of monetary policy between March 2010 and October 2011 to control inflation, inter alia, resulted in the slowing down of investment and growth, particularly in the industrial sector. Global factors include, in particular, the crisis in the Euro-zone and sluggish growth in several industrialized economies in 2012. Reducing impediments such as delays in obtaining project clearances, clarifying processes for land-acquisition and increasing access to infrastructure are crucial to boost investment and growth. Several steps including the setting up of the Cabinet Committee on Investment (CCI) to fast track large investment projects; strengthening of financial and banking sector; disinvestment in certain Public Sector Undertakings; permitting FDI in areas including multi-brand retail, power exchanges and aviation; fiscal consolidation, etc. have been undertaken to boost investment. The Union Budget 2013-14 has outlined several initiatives to boost investment in infrastructure and industry, that inter alia include encouraging Infrastructure Debt Funds, credit enhancement to infrastructure companies, raising the corpus of Rural Infrastructure Development Fund, introduction of investment allowance for new high value investments, etc. These measures would revive market confidence, and restore growth momentum over the medium term.