Press Information Bureau

Government of India

Ministry of Finance

18-December-2015 18:48 IST

The Union Finance Minister Shri Arun Jaitley said that India is one of the fastest growing economies of the world. He said that the economy has witnessed significant improvement in the macroeconomic stability in terms of low levels of inflation, fiscal deficit (FD) and Current Account Deficit (CAD) etc. The Finance Minister said that this outcome is creditable considering that the global economic situation continues to be uncertain transmitting negative spill-overs, because of which emerging markets and developing economies have, in general, become more vulnerable and fragile. He said that the current macroeconomic outcome is far superior to that in early 2013-14 when the situation was worrisome in terms of high current account and fiscal deficits with high inflation, high interest rates and low growth. Shri Jaitley said that the extant robust outcome was made possible by the slew of policy measures and structural reforms undertaken by the present Government in last 19 months to address the critical problems of stimulating and stabilizing the economy. These included measures to boost growth through enhanced public investment, kick starting stalled projects, improving the status of financial inclusion significantly, improving governance through systemic changes like open auction for natural resources like coal and spectrum, monetary policy framework and greater fiscal federalism and improving business environment through reforms in policies and regulation among others.

Addressing the Third Meeting of the Consultative Committee attached to the Ministry of Finance on the subject of ‘State of Economy’ here today, the Finance Minister Shri Jaitley said that the macroeconomic outcome in India in the current juncture is one of consolidation of the economic recovery evidenced in recent years. Shri Jaitley further said that India clocked 7.3 per cent growth rate in Gross Domestic Product (GDP) in the year 2014-15, higher than 6.9 per cent growth achieved in 2013-14 and 5.1 per cent in 2012-13; showing that India is firmly on the path of economic revival. This growth compares favourably with the growth of 3.4 per cent achieved by the global economy and 4.6 per cent by the emerging markets and developing economies as a block in the year 2014.

The Finance Minister further said that the GDP growth was 7.2 per cent in the First Half (H1) of 2015-16 as against 7.0 per cent in the second half of the last year. Growth has also improved from 7 per cent in the first quarter (Q1) of 2015-16 to 7.4 per cent in Q2 of the current fiscal. Viewed sector-wise, the pick-up in the growth of manufacturing sector can boost overall growth both directly and indirectly because of the substantial backward and forward linkages that the sector has. The manufacturing growth has improved from 6.1 per cent in H2 2014-15 to 8.2 per cent in H1 2015-16. The service sector growth has been robust at 8.8 per cent during H1 2015-16.

The Union Finance Minister Shri Arun Jaitley also informed that the Government continues to adhere to the path of fiscal consolidation. Despite the pressing need for enhanced public investment to boost the economic growth and tough commitments on account of requirements of federal structure, (greater tax devolution-- from 32 per cent to 42 per cent of the divisible pool to states), the Budget 2015-16 targeted a fiscal deficit of 3.9 per cent of the GDP, as compared to 4.0 per cent in 2014-15.The Finance Minister said that the fiscal outcome has been promising this year so far. Gross tax revenues increased by 23.1 per cent during April- October 2015-16 in comparison to the corresponding period in the previous year, which was mainly led by a buoyant growth in indirect taxes. The Union Budget 2015-16 estimated a growth in capital expenditure of 25.5 per cent. Against this, during April-October 2015, the growth in capital expenditure on plan account has been 61.3 per cent; while, the total capital expenditure grew by 31 per cent. Increased public investment, reflected in capital expenditure, is likely to promote private investment and growth. Fiscal deficit during April-October 2015-16 has been ₹ 64,505 crore lower than that in the corresponding period of the previous year.

Thereafter, the Members of the Consultative Committee gave their suggestions and observations with regard to State of Indian Economy. Most of the Members of the Committee congratulated the Government for improving the overall macro economic situation of the Indian Economy. They made many suggestions for further improving the performance of different sectors of the economy. One of the Members pointed-out about the poor state of Steel industry in the country . Replying to the observation of the Member, the Finance Minister informed about the various measures taken by the Government to protect the domestic Steel industry by raising Customs and safeguards’ duty in recent times. Some Members suggested for more focus on boosting agriculture production especially pulses. Replying to this observation, the Finance Minister briefed about various steps taken by the Central Government to increase area under cultivation for pulses including highest bonus for pulses under Minimum Support Prices (MSP) and steps taken to ensure adequate supply of pulses in different States to keep the prices under check and further steps being taken to keep adequate stock of pulses in future to meet any shortfall among others. Members appreciated the increase in flow of agriculture Credit. However, they suggested for increase in number of bank branches in the country. Some Members suggested measures to bring down NPAs of the banks especially Public Sector Banks(PSBs). The MoS(Finance) Shri Sinha informed the Members that total NPA of banks(both Public &private Sector Banks) is to the tune of ₹ 3.47 lakh crore, out of which ₹ 3 lakh crore is of PSBs and remaining ₹ 47,000 crore of Private Sector Banks. He gave details of various actions taken by the Government including recapitalization of banks & restructuring of loans among others to reduce the NPA especially of PSBs. Major NPA is because of poor performance of Steel & sugar industry, State Discoms and stalled infrastructure projects among others. The Minister informed that the Government has taken various steps to improve the performance of these sectors which, in turn, would help in bringing down NPAs especially of PSBs . Some members suggested that law be framed that the corporate Companies making huge profits should spend part of their profits in the development of areas from where they are performing and making profits. Members stressed the need for additional steps to be taken to boost job opportunities especially in rural areas to engage rural youth. In this regard, some Members appreciated the performance of Pradhan Mantri MUDRA Yojana which helped in extending credit facilities for self employment in micro, small and medium sector and thereby boosting self employment opportunities especially in rural areas. Some Members suggested for early implementation of GST.

The Finance Minister, while thanking the Members of their useful suggestions said that the present Government is fully committed to the goal of achieving inclusive growth in order to mitigate poverty and to ensure decent quality of life for all the citizens.

Along with the Union Finance Minister Shri Arun Jaitley and Minister of State for Finance Shri Jayant Sinha, the Members of the Parliament and the Consultative Committee who attended the aforesaid Meeting today include, Shri Anirudhan Sampath, Shri Baijayanta Jai Panda, Shri Dilip Kumar Mansukhal Gandhi, Shri.J.Jayasingh Thiyagaraj Natterjee, , Shri.P.P.Chaudhary and Shri Subhash Chandra Baheria ( all Members of Lok Sabha); Shri K P Ramalingam, Shri Rajkumar Dhoot, Shri Ranvijay Singh Judev, Shri Satish Chandra Misra and Shri Sukhendu Sekhar Roy (all Members of Rajya Sabha).

Among the officers present during the aforesaid Consultative Committee Meeting include Shri Ratan P Watal , Finance Secretary ,Shri Shaktikanta Das , Secretary, DEA, Dr.Hasmukh Adhia , Revenue Secretary, Ms Anjuli Chib Duggal, Secretary (DFS), Ms Aradhna Johri, Secretary, Disinvestment and Dr. Arvind Subrahmanian , Chief Economic Adviser (CEA) and senior officers of the Ministry of Finance among others.

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DSM

Macroeconomic consolidation through structural reforms and fiscal consolidation bolsters growth while addressing financial-sector stress. Macroeconomic consolidation has strengthened with lower inflation, reduced fiscal and current account deficits, and improving growth attributed to structural reforms and policy measures over the prior 19 months. The Government pursued enhanced public investment, restarting stalled projects, improved resource allocation procedures, a clarified monetary policy framework, and greater fiscal federalism. Fiscal consolidation continued alongside increased capital expenditure and buoyant tax revenues. Financial-sector measures-bank recapitalization, loan restructuring, and remedial duties for affected industries-were advanced to address nonperforming assets and sectoral weaknesses while promoting financial inclusion and rural credit.