Sources say PM Narendra Modi is keen to chalk out a strategy to deal with currency crunch after notes ban
New Delhi: Prime Minister Narendra Modi met top economists, officials and members of the Niti Aayog this evening to take stock of the economy, especially in view of the notes ban and the cash crunch that has followed. PM Modi, during the meeting, said the budget cycle has an effect on the real economy, and "the date of budget presentation is being advanced, so that expenditure is authorized by the time the new financial year begins," according to a government statement. The meeting was held just over a month before the government presents the union budget on February 1. The theme of the meeting was Economic Policy, The Road Ahead.
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During the meet, PM Modi also called for innovative approaches in skill development and tourism.
Niti Aayog vice-chief Arvind Panagariya said "agriculture, jobs and budget issues were discussed in the meet."
Sources said PM Modi wanted feedback from the experts and is keen to chalk out a strategy to deal with the adverse impact of the currency crunch on the economy, particularly in the unorganised sector where people have lost jobs.
Among worries that reportedly were to be raised and discussed was the lowering of India's growth forecast by various agencies and also the Reserve Bank of India, for the current fiscal.
The central bank had in its monetary policy review earlier this month, reduced the economic growth forecast to 7.1 per cent from 7.6 per cent.
Multilateral funding agency ADB lowered its growth projection to 7 per cent for the current fiscal from its earlier projection of 7.4 per cent due to the impact of demonetisation on economic activities, it said. The Indian economy expanded by 7.1 per cent and 7.3 per cent in the first and second quarters of 2016-17.
Economists like former Planning Commission Deputy Chairman Montek Singh Ahluwalia has expressed worry that the demonetisation will disrupt the economy and will pull down the GDP growth rate for the current fiscal by up to two percentage points.
PM Modi's sudden move on November 8 to cancel 500-rupee and 1,000-rupee banknotes, which accounted for 86 per cent of the cash circulating in the economy, has disrupted daily life and depressed consumer demand with people struggling to get new notes holding back on spending, except for immediate and urgent needs.
India's services activity plunged into contraction in November for the first time since June 2015, due to a sharp decline in demand, while factory activity also slowed.
Opposition parties have fiercely attacked the government over the notes ban and disrupted the entire winter session of parliament, accusing it of poor implementation of the demonetisation causing untold misery to people amid the massive cash crunch.