(a)whether economy of the country has reached an alarming level, as bad as
1991 when gold was pledged to foreign countries;
(b)if so, the details thereof along with the reaction of the Government
thereto;
(c)the factors responsible for the present economic condition of the
country;
(d)whether Government has taken steps to ameliorate and streamline the
condition of economy; and
(e)if so, the details thereof and if not, the reasons therefor?
MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI NAMO NARAIN MEENA)
(a) & (b) No, Sir. Since 1991 the structure of the Indian economy has changed
in fundamental ways with share of the services sector in the economy
increasing significantly. Performance of the services sector is less volatile
compared to that of agriculture and industry. Indian financial markets are
well regulated and have become more mature, diverse and deep and have
resilience to absorb shocks. The exchange rate is currently largely market
determined, and thus able to absorb shocks. Also, India’s foreign exchange
reserves are much higher and external sector vulnerability indicators are at
safe levels, and more comfortable vis-a-vis the levels in 1991.
(c) The slowdown in the growth of the economy is mainly on account of the
slowdown in the industrial sector and lower growth registered in the
agriculture sector. This reduction in the growth rate is attributable to
both domestic and global factors. Global factors include, in particular,
the crisis in the Euro-zone and the near-recessionary conditions prevailing
in Europe; sluggish growth in several industrialized economies; hardening of
international prices of crude oil, etc. Among domestic factors, the
tightening of monetary policy in order to control inflation, inter alia,
resulted in the slowing down of investment and growth, particularly in the
industrial sector.
(d) & (e) The measures 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.
Certain specific measures taken by the Government to achieve higher growth, inter
alia, include enhancing the level of investment for agriculture sector including
irrigation projects, promoting Micro Small & Medium Enterprises (MSME) sector by
way of higher allocation of funds, enhancing investment in the infrastructure
sector and also focusing on Public Private Partnerships, a number of legislative
measures to develop the financial sector and introduction of a new National
Manufacturing Policy, etc. Measures are being undertaken to facilitate fiscal
consolidation. The steps recently outlined include reduction in the subsidy on
diesel, announcement of disinvestment in certain PSUs, along with measures to
strengthen the investment climate (liberalization of FDI in multi-brand retail,
aviation, broadcasting) and are expected to revive market confidence and restore
growth momentum.