Press Information Bureau

Government of India

Ministry of Finance

22-November-2012 19:05 IST

The economic reform measures recently outlined by the Government that include reduction in the subsidy on diesel, announcement of disinvestment in certain PSUs and steps to strengthen the investment climate (liberalization of FDI in multi-brand retail, aviation, broadcasting) are expected to revive market confidence and restore growth momentum over the medium term. The other steps being undertaken by the Government to revive the economy, inter-alia, include better access to finance for manufacturing sector, fast tracking of large investment projects in the areas of power, petroleum and gas, roads, coal etc, use of buffer stocks to moderate food inflation, strengthening of financial and banking sector, reducing the volatility of exchange rate etc.

In the Second Quarter Review of Monetary Policy 2012-13 that was issued by the Reserve Bank of India on October 30, 2012, the baseline projection of GDP growth for 2012-13 was revised downwards to 5.8 per cent from 6.5 per cent. The RBI has observed that the reasons behind the revision include rise in global risks and domestic risks emanating from factors including slowing down of investment demand and moderation in consumption spending etc.

This was stated by the Minister of State for Finance, Shri Namo Narain Meena in a written reply to a question in the Rajya Sabha today.

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DSM/RS/ka

Economic reform measures aim to revive market confidence and restore growth momentum through subsidy cuts, disinvestment and FDI liberalization. Recent economic reform measures include reduction in the subsidy on diesel, disinvestment in selected PSUs and liberalization of FDI in multi brand retail, aviation and broadcasting, together with steps to improve access to finance, fast track large infrastructure projects, use buffer stocks to moderate food inflation, and strengthen the financial sector; these measures are presented as intended to revive market confidence and restore growth momentum amidst a downward revision of the baseline GDP projection due to global and domestic risks.