FM Arun Jaitley said India clocked 7.3 per cent growth rate in 2014-15, higher than 6.9 per cent growth achieved in 2013-14 and 5.1 per cent in 2012-13.
Finance Minister Arun Jaitley today said Indian economy has witnessed significant improvement in macro-economic stability despite uncertain global economic situation.
Addressing a meeting of the Parliamentary Consultative Committee attached to the Ministry of Finance on ‘State of Economy’, he said the macroeconomic outcome is evident in the economic recovery.
“The economy has witnessed significant improvement in the macroeconomic stability in terms of low levels of inflation, fiscal deficit and Current Account Deficit,” an official statement quoted him as saying at the meeting.
India’s achievement of being one of the fastest growing economies of the world 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 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.
A slew of policy measures and structural reforms during the last 19 months have helped reverse the outlook, Jaitley said adding reforms have addressed the critical problems of stimulating and stabilising the economy.
The measures to boost growth included enhanced public investment, kick starting stalled projects, financial inclusion, improving governance through systemic changes like open auction for natural resources of coal and spectrum.
Also, unveiled steps were monetary policy framework and greater fiscal federalism and improving business environment through reforms in policies and regulation, he said.
Jaitley said India clocked 7.3 per cent growth rate in 2014-15, higher than 6.9 per cent growth achieved in 2013-14 and 5.1 per cent in 2012-13.
This was an evidence of “India being firmly on the path of economic revival,” he said.
India’s growth rate compares to 3.4 per cent expansion in the global economy and 4.6 per cent in emerging markets and developing economies.
GDP growth was 7.2 per cent in the first half of current fiscal as against 7 per cent in the second half of last year.
Growth has improved from 7 per cent in the first quarter of 2015-16 to 7.4 per cent in the second quarter of current fiscal.
“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,” he said adding the manufacturing growth has improved from 6.1 per cent in H2 2014-15 to 8.2 per cent in H1 2015-16.
The services sector growth has been robust at 8.8 per cent during the first half of 2015-16. (MORE) PTI JD ANZ MR 12181934
Jaitley said government continues to adhere to the path of fiscal consolidation.
Despite the pressing need for enhanced public investment to boost economic growth and greater tax devolution to states, Budget 2015-16 targeted a fiscal deficit of 3.9 per cent of GDP as compared to 4 per cent in 2014-15.
Stating that the fiscal outcome has been promising this year, he said gross tax revenues increased by 23.1 per cent during April-October.
Against a 25.5 per cent growth in capital expenditure estimated in Budget for 2015-16, capital expenditure on plan account has been 61.3 per cent during April-October. Total capital expenditure grew by 31 per cent.
Increased public investment, reflected in capital expenditure, is likely to promote private investment and growth, the statement said.
Fiscal deficit during April-October 2015-16 has been Rs 64,505 crore lower than that in the corresponding period of previous year.
Members of the Committee gave suggestions for improving the performance of different sectors of the economy.
When an MP spoke about the poor state of steel industry, Jaitley articulated various measures taken by the government to protect the domestic steel industry by raising customs and safeguards duty in recent times.
Some MPs demanded more focus on boosting agriculture production, especially pulses. To this, the minister briefed them about various steps taken to increase area under cultivation of pulses, including highest bonus under MSPs.
He also highlighted steps taken to ensure adequate supply of pulses in different states to keep prices under check and further steps being taken to keep adequate stock of pulses in future to meet any shortfall, among others.
Members suggested increasing number of bank branches while some other suggested measures to bring down NPAs.
Minister of State for Finance Jayant Sinha informed the Committee that total NPA of banks (both public and private sector banks) is Rs 3.47 lakh crore, out of which Rs 3 lakh crore is of PSBs and remaining Rs 47,000 crore of private sector banks.
He gave details of various actions taken by the government, including recapitalisation of banks and restructuring of loans to reduce the NPAs.
The NPA is because of poor performance of steel and sugar industry, state electricity distribution companies and stalled infrastructure projects.
“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,” the statement said.
Some members suggested that a law be framed so that the corporates making huge profits should spend part of their profits in the development of local area.