Modi finding fix for India’s economic worries; remedial measures soon – 20 Sep 2017

  • A broad framework to boost the economy was discussed in a meeting of ministers and officials chaired by finance minister Arun Jaitley on 19 Sep 17 as the government grappled with a slump in growth.
  • Prime Minister Narendra Modi will take a final decision on the measures, according to people with knowledge of the deliberations. There has been concern in government circles over growth slumping to a three-year low of 5.7% in 2Q17 with disruption due to the rollout of goods and services tax (GST) and lingering impact of demonetisation being the primary cause.
  • A rise in the current account deficit and inflation has added to worries. Some economists have argued that the decline is structural in nature and needs to be addressed appropriately.
  • Finance minister Jaitley is expected to consult other ministries before preparing a detailed plan that will be presented to the prime minister. The plan is expected to examine the reasons for the slowdown and the measures that can be taken to accelerate growth.
  • India’s exports have not picked up to the extent expected even as the global economy has rebounded. Export growth was 8.57% in from Apr-Aug 17 while imports rose 26.63%, worsening the trade deficit and the current account deficit.
  • The appreciation of the rupee has eroded India’s exports competitiveness while teething troubles with GST have not helped. Exporters met revenue secretary Hasmukh Adhia to present demands for relief. The sluggish growth has also led to worries about job creation.

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