Prime Minister Narendra Modi held a two-hour meeting on Thursday with over 30 industry experts and economists to review and take their views on steps to revive the Indian economy on growth and employment.
According to sources, PM Modi addressed the economists on the five-trillion-dollar economy target.
Sources said the Prime Minister took suggestions on boosting consumption and generating demand in the economy. Home Minister Amit Shah, Commerce Minister Piyush Goyal and Highways Minister Nitin Gadkari were also present.
But surprisingly Finance Minister Nirmala Sitharaman was not present at this meeting.
DEA Secretary Atanu Chakrabortty, Finance Secretary Rajeev Kumar, Niti Aayog Vice Chairman Rajiv Kumar and CEO Amitabh Kant, PMEAC Chairman Bibek Debroy, non-executive chairman of Punjab and Sind Bank Charanjit Singh, Sanjay Nair, India head KKR, a global private equity firm, and Bandhan Bank CEO Chandra Shekhar Ghosh also attended.
The meeting assumes important as the government is in the process of formulating Budget proposals for 2020-21.
PM Modi on Monday interacted with top business tycoons to discuss issues facing the economy and measures needed to boost growth and create jobs.
The latest GDP data for the July-September quarter showed a significant further moderation in the pace of economic growth to 4.5 per cent — the weakest in six years, with a key contributory factor being a slump in manufacturing output.
The Modi government has undertaken a number of measures to arrest the growth slowdown. In September 2019, it announced a cut in the corporate tax rate to 22 per cent from 30 per cent. The government also lowered the tax rate for new manufacturing companies to 15 per cent to attract new foreign direct investments. The tax rate reductions bring India in line with rates in other Asian countries.
The government’s other initiatives include bank recapitalisation, the mergers of 10 public sector banks into four, support for the auto sector, plans for infrastructure spending, as well as tax benefits for startups.
But experts say none of these measures directly address the widespread weakness in consumption demand, which has been the chief driver of the economy.
Also, financial sector fragilities continue to weigh on the economic growth momentum, with the high level of non-performing loans on the balance-sheets of the public sector banks, constraining their fresh lending.
Furthermore, there are also risks from potential contagion effects from troubled non-bank financial companies (NBFCs) to the balance-sheets of some commercial banks, which could further weigh on the overall pace of credit expansion.
In response to the growth slowdown, the Reserve Bank of India (RBI) has eased policy rates significantly during 2019, with a series of rate cuts since February 2019.
Further stimulus measures are expected in the upcoming Budget where the focus is likely to be on reforms, including some structural measures such as reducing red tape and boosting foreign direct investment.
The Monday’s meeting with industrialists is in the series of discussions that Modi has had during the last couple of weeks to seek suggestions to revive growth.
(With agency inputs)