With global financial agencies revising growth projections of the Indian economy further downwards, the Modi government is holding top-level internal consultations on further macro-economic measures required in the wake of the COVID-19 pandemic.
The central Cabinet, a group of key ministers, has held series of meetings with the Prime Minister's Economic Advisory Council (PMEAC), government think tank Niti Aayog, and the Finance Ministry since Thursday.
Sources in the Ministry of Finance have indicated that after an apex review of the economy, the government may announce fresh stimulus measures keeping in mind the specific sectors still facing challenges due to the coronavirus pandemic.
A source close to the developments told Sputnik, "The government has essentially held brainstorming sessions on the specific needs of the economy. Various government wings such as the Ministry of Finance, Niti Ayog, and PMEAC have made representation to the central Cabinet".
The source also indicated a number of issues such as the recapitalisation of banks and faster disinvestment of government companies have been deliberated upon.
It may be noted that India is projected to witness a recession in the current financial year (April 2020 – March 2021). Earlier, various global financial agencies had projected a decline of up to 5 percent owing to the COVID-19 pandemic and over two-month lockdown between the end of March and May.
In May, ratings agencies like Nomura, Goldman Sachs, and Fitch Ratings forecast that Indian growth will contract by 5 percent in 2020-21. Nomura predicted that in April – June 2020, the peak lockdown period, India would see a contraction of 25 percent. However, now the agencies are revising their projections on the Indian economy further downwards.
Care Ratings, for example, on 2 July revised India’s growth projection downwards to (-) 6.2 percent from (-) 1.6 percent.
Global investment bank Citi has revised India's gross domestic product growth forecast downwards for the financial year 2020-21 (April 2020-March 2021). From a fall of 3.5% projected earlier, the bank now says that the country is likely to see the economy contract by 6 percent in the current financial year.