Concerned over the slowdown in the economy, the NDA Government is expected to soon come out with a series of measures to boost GDP growth that hit a three-year low of 5.7 per cent in the first quarter of the current fiscal. Finance Minister Arun Jaitley on Wednesday said the new steps will be announced after consulting Prime Minister Narendra Modi.
With several sectors of the economy, including manufacturing, construction and agriculture, showing a negative trend, the Government is facing an enormous challenge to undo the economic disruption cause by demonetisation and implementation of the GST.
The Prime Minister is expected to hold a high-level meeting in the next few days to review the status of the economy, after which the Government may come out with measures and stimulus to place the economy on track.
Jaitley himself held a series of meetings in the last few days with some of his ministerial colleagues and senior Government officials to take stock of the situation and firm up steps to push up growth.
On Tuesday, he had a two-hour-long review meeting that was attended by Commerce Minister Suresh Prabhu, Railway Minister Piyush Goyal and Niti Aayog Vice-Chairman Rajiv Kumar. Besides, Additional Principal Secretary to the Prime Minister PK Mishra, Commerce Secretary Rita Teaotia, secretaries in the Finance Ministry and Chief Economic Adviser Arvind Subramanian were part of the deliberation.
“We have taken note of all economic indicators which are available... The Government will take any additional moves which are necessary. I am not in a position to announce today in the Press conference. I will certainly be consulting the Prime Minister before that and when we decide, you will come to know,” he told reporters here.
He added this was a proactive Government and had been reacting to the situation as when it demanded. “We have been taking appropriate actions... We have been consistently moving on the reform agenda,” he stressed.
The alarming fall in the GDP to 5.7 per cent from 7 per cent in one year, has stripped India of the tag of the fastest-growing economy ahead of China. A research report put out by the State Bank India two days ago said the slowdown in the economy was real and not technical and called for more public spending to arrest the slide.
“We certainly believe that we are in a slowdown mode since September 2016 and a slowdown that has been prolonged to Q1 of this fiscal year is technically not short-term in nature or even transient,” the SBI report said.
As suggested by it, the Government may come out with measures that will boost public spending and give renewed thrust to improve core sector growth. Indicating that increasing public spending was going to be a panacea for the ailing economy, Jaitley offered no hope of any cut in excise duty on petrol and diesel to cushion the spike in rates. He said the Government needed revenue to support public spending without which growth will suffer.
“You should remember that the Government needs revenue to run. How will you build highwaysIJ” he said. “The Government has increased public spending on infrastructure... Whatever (GDP) growth is there, it is fueled by public spending and Foreign Direct Investment. If public spending is slashed, it will mean cutting down expenditure on social sector schemes.”