NEW DELHI: Prime Minister Narendra Modi on Monday held meetings with Finance Minister Nirmala Sitharaman and officials from the Finance Ministry, including finance, revenue and economic affairs secretaries, to take stock of the country’s ailing economy.
“While the government discussed the state of the economy in general, there were other important issues which were brought to notice too, including falling revenue collections, the revival of BSNL and MTNL, and the possibility of easing personal income tax rates,” a senior official said.
Post the initial euphoria in the markets after the corporate tax cut announcement, economic indicators have not been very flattering.
Poor GST numbers, weak PMI data for both services and manufacturing and a sharp cut in growth estimates by the Reserve Bank of India (RBI) after its October policy meet has already soured the sentiment of businesses as well as investors.
The RBI has now slashed its GDP growth projection for the current fiscal from 7.4 per cent at the start of the year to 6.1 per cent now.
The meeting also holds significance since it comes in the backdrop of accentuated fiscal slippage concerns post the corporate tax cut and due to poor GST collections.
Meanwhile, the long-delayed revival package for BSNL and MTNL was also discussed, even as both ailing firms are struggling to pay employees on time.
While a PMO panel headed by Principal Secretary PK Mishra had asked if both could be revived, the finance ministry had highlighted some reservations in infusing money into them.
As for relaxations in personal income tax, there have been differences within the finance ministry over the matter since the revenue department opposes the move while the Department of Economic Affairs believes it will boost the economy.
“Another vital issue discussed was prevention of corruption in the backdrop of information shared by the Swiss bank today and creating a common financial intelligence system to prevent economic offences and frauds,” the official said.
The government formed a 20-member inter-ministerial coordination committee to help in the prevention of financial crime under the chairmanship of the revenue secretary.
Income tax cut debate
There have been major differences within the finance ministry over the matter since the revenue department opposes the move while the Department of Economic Affairs believes it will boost the economy