Finance Minister Arun Jaitley discussed the economic situation with his top officials.
Highlights
- Arun Jaitley discusses steps to boost economy
- The meeting comes after GDP growth in first quarter slumped to 3-year low
- GDP growth has declined steadily for six straight quarters
The government is worried about the economic slowdown and at a two-hour meeting on Tuesday, Union Finance Minister Arun Jaitley told top bureaucrats from the Commerce and Finance ministries to implement plans with a focus on speed. The theme was 'what are we waiting for, we must go ahead and move fast', sources later said. The review meeting was the second in a row to put the economy back on a high growth path. Key indicators such as Gross Domestic Product (GDP) and industrial production continue to plummet and a widening current account deficit has added to the worries.
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Union Finance minister Arun Jaitley underscored that the government needs to take the measures immediately, sources said. The brainstorming session was expected to include discussions on a financial package to stimulate the economy, but no policy decision was made.
Each ministry gave its suggestions, they were asked to ensure fast implementation. The Commerce Ministry, for example, was asked to see how to incentivise exports, remove bottlenecks, countering GST disruption.
Besides the secretaries, the meeting was attended by NITI Aayog Vice Chairman Rajiv Kumar, Chief Economic Advisor Arvind Subramanian and union minister Suresh Prabhu.
Prime Minister Narendra Modi was scheduled to chair the review, but sources said he will hold a meeting later. The Additional Secretary to the Prime Minister, PK Mishra, was present at the meet.
The government is concerned at the stuttering growth despite a benign macroeconomic environment with easy money flowing in, global growth reviving, government revenues looking solid, deep foreign exchange reserves, reasonable oil prices and a decent monsoon keeping food prices in check.
The meeting comes days after government data showed GDP growth in the first quarter of the current fiscal slumping to a three-year low of 5.7 per cent, from 7.9 per cent in the same quarter last year and 6.1 per cent in the last January-March quarter. GDP growth has declined steadily for six straight quarters.
Exports face strong headwinds and industrial growth is the lowest in five years.
The current account deficit (CAD) in the April-June quarter has risen to 2.4 per cent of the GDP, or US dollars 14.3 billion, mainly on account of an increased trade gap. CAD is the difference between inflow and outflow of foreign exchange. It was 0.1 per cent (USD 0.4 billion) in the June quarter last year and 0.6 per cent (USD 3.4 billion) in the January-March quarter this year.
Economists have blamed teething troubles in the implementation of the Goods and Services Tax (GST) and a lingering impact of last year's notes ban for the slowdown.
Yesterday, Arun Jaitley had met Railway Minister Piyush Goyal and Minister of State for Commerce and Industry CR Chaudhary. Chief Economic Adviser Arvind Subramanian had briefed the Prime Minister on the macro-economic situation last week.
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