Finance Minister Arun Jaitley reviews state of economy

The review meeting, which lasted for over two hours, was also attended by Commerce Minister Suresh Prabhu, Railway Minister Piyush Goyal and Niti Aayog Vice Chairman Rajiv Kumar, said government sources.

Besides, Additional Principal Secretary to the Prime Minister PK Misra, Commerce Secretary Rita Teaotia, secretaries in the Finance Ministry and Chief Economic Adviser Arvind Subramanian were part of the deliberation.

This meeting was a follow up of yesterday's meeting which Jaitley held here.

After finalising a detailed roadmap for the economy, Jaitley and finance ministry officials would make a presentation to the prime minister on steps that could be taken to rejuvenate the economy.

Modi was scheduled to interact today with Jaitley and other officials on the state of economy but the meeting has been postponed.

No new dates have been proposed as yet.

The Prime Minister's Office has asked the finance ministry to hold consultations with key ministries to prepare a matrix of government revenues and spending as well as the measures needed to arrest the decline in GDP growth, the sources said.

Two years ago, India was touted as a rare bright spot in a gloomy global economy with GDP growth outpacing a slowing China.

But since early 2016, GDP growth has fallen for six consecutive quarters, dipping to a three-year low of 5.7 per cent in the April-June quarter with India losing the fastest growing economy tag to China for the second straight quarter.

Sectoral reasons and action points would be prepared, they said, adding that high-level discussions with ministries such as railways to assess the capital requirement for the year were held yesterday and more such meeting would follow.

The sources said the government is keen to address structural problems facing the economy as well as transient issues with the implementation of the Goods and Services Tax (GST).

The GST was touted to boost growth by up to 2 percentage points but technical glitches in the first two months of implementation have only created a scare that revenues may fall way short of expectations.

Sources said targeted government spending given the limited fiscal space available particularly on infrastructure, combined with quickly fixing the problems with GST and focusing on sectors and industries that create jobs are the prime focus.

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.

Besides falling GDP growth rate, exports are facing strong headwinds and the industrial growth is the lowest in five years.

The current account deficit (CAD) - the difference between inflow and outflow of foreign exchange, has risen to 2.4 per cent of GDP in April-June.

CEA Arvind Subramanian had last week briefed the Prime Minister on macro-economic situation.