Ahead of the Union Budget presentation, Prime Minister Narendra Modi on January 6 met top executives from corporate India to discuss issues facing the economy and measures needed to boost growth and create jobs.
Richest Indian Mukesh Ambani, Tata group’s Ratan Tata, telecom czar Sunil Bharti Mittal, billionaire Gautam Adani, Mahindra Group chairman Anand Mahindra, and mining baron Anil Agarwal were among those who attended the meeting.
Tata Sons chairman N Chandrasekaran, TVS chairman Venu Srinivasan, L&T head AM Naik were also present, according to a photograph of the meeting released here.
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 percent – 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 percent from 30 percent. The government also lowered the tax rate for new manufacturing companies to 15 percent 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.