PM takes stock of economy amid depreciating rupee
New Delhi: Prime Minister Narendra Modi on Friday began a two-day review of prevailing economic issues including fall in the rupee, rising fuel prices and reforms measures needed to boost growth, official sources said.
Modi met Finance Minister Arun Jaitley, Petroleum Minister Dharmendra Pradhan, RBI Governor Urjit Patel and other key officials involved in economic policymaking. The deliberations will continue tomorrow, the sources said.
The meeting was also attended by Revenue Secretary Hasmukh Adhia and Economic Affairs Secretary Subhash Chandra Garg, while expenditure Secretary Ajay Narayan Jha will join on Saturday meeting during which the PM will also review the budget, sources said.
The possible fiscal and monetary measures that the government could take to improve market confidence and the economic scenario were discussed during the meeting.
The PM also will hold another economic review meeting with key policymakers on Saturday to discuss possible interventions by the government to address the macroeconomic challenges arising out of both rupee fall and price surge of fuel.
On the other side, the ministers of PM Modi's government see the steep rise of fuel as state affairs and the centre has nothing to do with it. Though, the petroleum ministry is in talks with the respective state governments. One of the senior ministers further asserted that 'everything has a right time, right place and right volume.'
The Finance Ministry has ruled out any cut in taxes to ease the burden on consumers, saying it does not have the bandwidth to lose any revenue without developmental spending being cut. The government can ill-afford this in an election year.
Petrol price on Friday climbed to an all-time high of INR 81.28 per litre in Delhi, while in Mumbai it inched up to INR 88.67. A litre of diesel in the national capital was priced at INR 73.30 and INR 77.82 in Mumbai.
Every INR 2 cut in the price of petrol and diesel would lead to a revenue loss of around INR 30,000 crore, as per ministry estimates.
The government has so far maintained that it would not take any knee-jerk action as a response to the fall in rupee or spike in fuel prices.
Data from the Commerce Ministry has shown better than expected trade deficit at USD 17.40 billion in August, down from USD 18.02 billion a month ago. Exports grew 19.21 per cent to USD 27.84 billion while imports rose 25.41 per cent to USD 45.24 billion.
Also, boosting the government was retail inflation rate easing to a 10-month low of 3.69 per cent and wholesale inflation to 4 month low of 4.53 per cent in August.