News and Events

The Prime Minister has got down to business on the first day after assuming charge of the Finance Ministry. Cracking the whip at his first meeting with the top officials of the Finance Ministry, the Prime Minister said that the government needed to ‘reverse the climate of pessimism’ in the economy. He called for the revival of the ‘animal spirit in the economy’ and emphasized the need to manage the balance of payments situation. Dr Manmohan Singh directed the top officials to bring about policies that would help bring back institutional capital flow back to the country and revive investor sentiment within the domestic economy. Tweeting after a series of meetings, the Prime Minister stated, “In the short run we need to revive investor sentiment, both domestic and international.” Institutional capital flows to India have dipped after April, which has cause the rupee to slide to its all time lows. The rupee today closed at 57.15, the third consecutive day it has closed below 57 against the dollar. “The immediate emphasis is to manage balance of payments for which all policies should be directed to help institutional flows to India,” the Prime Minister observed after the series of meetings concluded. Along with the Chief Economic Advisor to the Finance Ministry, Dr Kaushik Basu, the five Secretaries in the Finance Ministry also met the Prime Minister today. Top officials in the Prime Minister’s Office (PMO) have indicated that it is very likely that a package to boost economic growth could be announced as early as next week. The immediate focus, along with the balance of payments, is tackling the burgeoning capital account deficit. That will also help stem the fall of the rupee. “He has directed all of us to help improve the current situation. He has taken inputs from all departments of the ministry,” Finance Secretary RS Gujral told. Before meeting the Prime Minister in the morning, the Chief of the Prime Minister’s Economic Advisory Council Dr C Rangarajan spoke to RBI Governor D Subbarao. It is learnt that Prime Minister may also meet RBI Governor in the near future to take inputs on the liquidity situation. There is growing concern for the policymakers because the Jan-March GDP growth fell to 5.4 per cent. With the prospect of poor monsoon looming large, there is fear that the April-June GDP growth figures could be hit.