A review of the overall economic conditions and discussions on possible intervention measures continued to be in focus, with the Prime Minister’s Office (PMO) holding more meetings with Finance Ministry officials on Thursday. Prime Minister Narendra Modi is learnt to have met Finance Minister Nirmala Sitharaman on Thursday, the second meeting this week, to take stock of the economy.
Another meeting was held in the PMO on Thursday regarding the e-commerce policy, attended by officials from Ministries of Finance, Commerce, External Affairs, Electronics and Information Technology and other concerned departments.
The Prime Minister is monitoring progress and implementation of measures that have already been announced. The government earlier announced a Rs 20 lakh crore of package, which comprised some fiscal relief, liquidity measures announced by the Reserve Bank of India and lending activity by the banks especially to MSMEs. While the most distressed were catered to in earlier measures, there is now growing demand for a wider income support to help provide a demand stimulus.
The Prime Minister has been taking a series of meetings since last week with top government officials and ministers to assess the overall economic situation of the country. In the backdrop of the steep economic contraction expected in the April-June quarter, the government is trying to assess what more measures can be taken to support growth and the ways to fund it. “The PMO has held several meetings with NITI Aayog, finance ministry and commerce ministry on both various aspects of the economy and the kind of interventions that will be required. The focus is on assessing economic situation and what possible measures may be required from September onwards. Aspects relating to e-commerce police are being looked into by commerce ministry closely,” a government official said.
Support for stressed sectors key
Several options have been discussed to shore up non-tax revenues amid sharply lower tax revenue collections for direct and indirect taxes. Indications are also that one time loan restricting could be allowed by select sectors facing stress.
The discussions come amid expectations of a steep contraction in GDP in April-June quarter. Many agencies expected GDP to contract by more than 5 per cent this year.
With the easing of lockdown measures, economic activity showed an uptick but with fresh state-level curbs, many indicators are now plateauing. Factory output has contracted for three consecutive months of March, April, May, even though the rate of contraction showed some improvement in May over the previous month. Even though the government has not released the headline number, the index values for Index of Industrial Production (IIP) reflect a 57.6 and 34.7 per cent contraction in April and May, respectively.
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