PM Modi to chair meeting of experts at Niti Aayog on Jan 9

Prime Minister Narendra Modi will chair the meeting of experts at the Niti Aayog on January 9 and is likely to discuss the state of economy.

The meeting will also be attended by Niti Aayog Vice Chairman Rajiv Kumar, CEO Amitabh Kant and other senior officials of the think tank.

“The prime minister will come to Niti Aayog on Thursday,” a senior government official told PTI.

The meeting assumes important as the government is in the process of formulating Budget proposals for 2020-21.

Modi on Monday interacted with top business tycoons to discuss issues facing the economy and measures needed to boost growth and create jobs.

Finance Minister Nirmala Sitharaman will present her second Union Budget on February 1 with an eye to reviving growth.

The latest GDP data for the July-September quarter showed a significant further moderation in the pace of economic growth to 4.5 per cent — the weakest in six years, with a key contributory factor being a slump in manufacturing output.

The Modi government has undertaken a number of measures to arrest the growth slowdown. In September 2019, it announced a cut in the corporate tax rate to 22 per cent from 30 per cent. The government also lowered the tax rate for new manufacturing companies to 15 per cent to attract new foreign direct investments. The tax rate reductions bring India in line with rates in other Asian countries.

The government’s other initiatives include bank recapitalisation, the mergers of 10 public sector banks into four, support for the auto sector, plans for infrastructure spending, as well as tax benefits for startups.

But experts say none of these measures directly address the widespread weakness in consumption demand, which has been the chief driver of the economy.

Also, financial sector fragilities continue to weigh on the economic growth momentum, with the high level of non-performing loans on the balance-sheets of the public sector banks, constraining their fresh lending.

Furthermore, there are also risks from potential contagion effects from troubled non-bank financial companies (NBFCs) to the balance-sheets of some commercial banks, which could further weigh on the overall pace of credit expansion.