The Indian economy slowed down in 2016-17, with the gross domestic product declining drastically from 8 per cent in 2015-16 to 7.1 per cent the next year, the government said today. Finance Minister Arun Jaitley said the slower economic growth reflected lower growth in the industry and the services sectors, due to a number of factors including structural, external, fiscal and monetary factors.

He said in the Lok Sabha that the lower rate of global economic growth in 2016, along with a reduction in gross fixed investment to GDP ratio, stressed balance sheets of the corporate sector and lower credit growth in the industry sector were some of the reasons for the low growth rate in 2016-17.

“Slower growth in 2016-17 reflects lower growth in the industry and services sector. Economic growth of a country depends on a number of factors including structural, external, fiscal and monetary factors,” he said during Question Hour.

According to the latest estimates from the Central Statistics Office, the growth rate of gross domestic product (GDP) at constant prices was 7.5 per cent, 8.0 per cent and 7.1 per cent respectively in 2014-15, 2015-16 and 2016-17. The growth in GDP at constant market prices was 5.7 per cent and 6.3 per cent in Quarter 1 (Q1) and Quarter 2 (Q2) of 2017-18 respectively.

Jaitley claimed that despite the slowdown, as per the IMF, India was the fastest growing major economy in 2016 and second fastest growing major economy in 2017 in the world. He said the government has taken various initiatives to boost growth, including giving a fillip to manufacturing, concrete measures for the transport and power sectors as well as other urban and rural infrastructure, comprehensive reforms in the foreign direct investment policy and a special package for the textile industry.

The minister said the government had also announced various measures in the 2017-18 budget to promote growth, which included a push to infrastructure development by giving infrastructure status to affordable housing, higher allocation to highway construction and focus on coastal connectivity.

“For highways development, the Bharatmala Pariyojana has been launched. The government has launched a phased programme for bank recapitalisation. This entails infusion of capital to the public sector banks, that is expected to encourage banks to enhance lending,” he said.

Jaitley said the Insolvency and Bankruptcy Code was enacted to achieve insolvency resolution in a timebound manner. He said the other growth promotion measures included lower income tax for companies with annual turnover up to Rs 50 crore, further measures to improve ease of doing business, and a major push to the digital economy.

Jaitley said according to information available from the Reserve Bank of India, the gross bank credit (outstanding) for agriculture and allied sectors was Rs 9,92,387 crore as of 2016-17 as against Rs 8,82,942 crore as on 2015-16.

“The introduction of the Goods and Services Tax (GST) has provided a significant opportunity to improve the growth momentum by reducing barriers to trade, business and related economic activities,” he added

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