Taking a serious note of the ongoing slowdown that has gripped several industrial sectors in the country and has resulted in job losses, Prime Minister Narendra Modi on Thursday reviewed the state of the economy with Finance Minister Nirmala Sitharaman.
Modi reportedly asked Sitharaman to come up with detailed plans to spur jobs and put the economy on the growth track.
Sitharaman is said to have appraised Modi about recent meetings with representatives of various sectors and informed him about current challenges faced by the auto as well as the realty sector, said a CNN News18 report.
The prime minister is concerned about the job cuts in various sectors especially the auto segment and issues prevailing in the small and medium enterprises (SME) sector, said the report quoting sources.
Modi, after delivering his sixth straight address to the nation on 73rd Independence Day from the ramparts of the Red Fort, went for a brainstorming session with Sitharaman and all top officials in her ministry, PTI said quoting sources privy to the development.
The prime minister asked the finance minister to streamline ideas to spur jobs and submit a report on the ongoing economic slowdown.
The meeting, they said, was to assess the nature of the slowdown and its long-term impact.
There are expectations that the government would come out with sector-specific stimulus sometime soon and more meetings will be held with the prime minister and finance minister before the final announcement.
An email query sent to the spokesperson of the finance ministry remained unanswered, PTI said.
India's economic growth has slowed to 6.8 percent in 2018-19 - the slowest pace since 2014-15, consumer confidence is waning and foreign direct investment has plateaued. International trade and currency wars are further aggravating the problem.
While the finance ministry has remained tight-lipped on measures being contemplated to take the economy out, Reserve Bank Governor Shaktikanta Das had earlier this month stated that the slowdown is more cyclical than structural and the growth is expected to review by the fourth quarter.
But there are ominous signs showing that slowdown may be deep. The auto sector is facing its worst crisis in two decades and reports suggest thousands of job losses in the automobile and ancillary industry.
In the real estate sector, the number of unsold homes has increased while fast-moving consumer goods (FMCG) companies have reported a decline in volume growth in the first quarter.
Though lending by banks to industries has shown a significant jump from 0.9 percent in April-June quarter in 2018 to 6.6 percent for the same period this year, the same to job-creating MSME sector has slipped from 0.7 percent in 2018 to 0.6 percent in June quarter.
Also, direct tax collections have grown by just 1.4 percent. The growth in GST collection till July this fiscal too has been only 9 percent as against 18 percent estimated in the Union Budget.
With sales of cars, tractors and two-wheelers declining to 19 year low, reports suggest 300 dealerships have been shut down and around 2.30 lakh jobs have been axed in the sector. The Society of Indian Automobile Manufacturers (SIAM) says about 10 lakh jobs have been hit in the auto component manufacturing industry.
In the real estate sector, unsold inventories stand at 42 months.
In the FMCG sector, Hindustan Lever reported volume growth of 5.5 percent in the April-June quarter compared to 12 percent last year. Dabur posted a growth of 6 percent against 21 percent last year.
Britannia Industries recorded a volume growth of 6 percent against 12 percent in the same period last year. Asian Paints saw a volume growth slump from 12 percent in the April-June quarter last year to 9 percent this year.
Sitharaman had held series of meetings with bankers, industry, capital market players and real estate earlier this month to firm up steps to increase investments and boost the economy.
Foreign investors during their meeting with Sitharaman had suggested that higher surcharge on income beyond Rs 2 crore, which was imposed in the Budget, should not be applicable on FPIs. The government's decision on surcharge had impacted the market.
On its part, the Reserve Bank of India (RBI), with inflation under its comfortable zone, reduced the key lending rate for the fourth successive time early this month to push economic activities. It has also asked banks to pass on the benefits of the rate cut to borrowers.