New Delhi: The finance ministry said on Monday that India is on track to reach the $5 trillion target by 2025, and although the economy has slowed down, it is still projected to grow at the fastest pace among G-20 nations this year.
In a written response to a question in the Lok Sabha, finance minister Nirmala Sitharaman said that despite some recent deceleration in growth, India’s economy is still projected by the International Monetary Fund’s World Economic Outlook of October 2019 to grow at the fastest rate in 2019-20 among G-20 countries.
“(The) Government has been taking several measures to address moderate levels of fixed investment rate in the economy, plateauing of private consumption rate and a modest export performance, with a view to increasing the GDP (gross domestic product) growth," Sitharaman said.
Minister of state for finance Anurag Thakur, who responded to a question on economy, defended the demonetization in 2016 as an important milestone in the country’s development as the note ban led to an increase in the number of taxpayers. “Five per cent growth is no economic slump... The goal of $5 trillion economy will be achieved by 2025," said Thakur.
The government’s defence of the economy’s health came after opposition members shouted slogans at the beginning of the winter session of Parliament on Monday.
Sitharaman said in her statement that the government has been engaging with various stakeholders to understand their concerns, and taking appropriate measures for the economy. She said while taking reform measures, the administration has kept inflation low, fiscal spending disciplined and current account deficit manageable to ensure macroeconomic stability for a healthy investment climate in the country.
India’s economic growth slowed to 5% in the June quarter and is expected to decelerate further in the second quarter for which official data is expected later this month. The government has announced a host of steps to arrest the slowdown, complementing the monetary easing pursued by the central bank.
Sitharaman said the 15% corporate tax rate for new domestic manufacturing firms announced in September was “amongst the lowest in the world". For other domestic firms not availing of any tax breaks, the rate was cut from 30% to 22%. The minister said in her written response to another question that India’s corporate tax rate is lower than that of most nations in South-East Asia such as the Philippines, Indonesia, Myanmar and Malaysia. “The stimulus by the corporate tax cut is expected to have a multiplier effect on the economy. Fresh investments into India are expected to not only result in new job creation but also lead to increased incomes and hence increased tax collection in the medium-to-long-run," said the minister.