Budget 2019: Modi meets top economists to discuss state of economy and way forward

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New Delhi | Updated: June 23, 2019 4:19:07 AM

Union Budget 2019 India: The participants shared their views in five distinct groups on the themes of “macro-economy and employment, agriculture and water resources, exports, education, and health”, the Prime Minister’s Office said in a statement.

Budget 2019 India,Budget 2019-20Budget 2019: PM Narendra Modi interacted with economists and experts on the theme “Economic Policy – The Road Ahead”. (Twitter/PIB)

Budget 2019-20: Prime Minister Narendra Modi on Saturday brainstormed with over 40 economists and experts on the state of the economy and the way forward as the government faces a Herculean task of reversing a growth slowdown and tackling joblessness and farm distress.

The participants shared their views in five distinct groups on the themes of “macro-economy and employment, agriculture and water resources, exports, education, and health”, the Prime Minister’s Office said in a statement. The deliberations took place under the aegis of Niti Aayog, which is chaired by the PM.

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The meeting comes at a critical time as economic expansion crashed to a five-year low of 5.8% in the fourth quarter of FY19. Investment growth has collapsed along with an aggravated slowdown in consumption. While private investments are hard to come by, the government’s ability to boost capital expenditure remains constrained by higher revenue expenditure following the launch of schemes like PM-Kisan (This scheme alone is estimated to cost Rs 90,000 crore a year).

According to the National Sample Survey Orgsanisation’s (NSSO) first annual survey on employment, joblessness rose to a 45-year high in 2017-18, with the unemployment rate at 6.1% (although the government asserted, the findings couldn’t be compared with earlier data).

Farm sector growth in the March quarter contracted (by 0.1%) for the first time since the third quarter of FY16. Given that monsoon deficit so far this year has been as high as 42%, and summer sowing has dropped 12%, dark clouds hover over farm production this year.

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Having grown at 9% in FY19, merchandise export growth collapsed to just 0.6% in April and 3.9% in May. Citing persistent risks from a global trade war, the IMF has trimmed its 2019 trade growth forecast by a sharp 60 basis points to 3.4%, against the actual rise of 3.8% in 2018. This will weigh on the prospects of Indian exports. Compounding the worries, various export incentive programmes of the government, such as MEIS, have been challenged by other countries at the WTO.

Earlier this month, Modi announced the formation of a high-powered task force to suggest structural reforms to boost farm productivity and marketing of the produce. He also stressed the need to catapult India into the $5-trillion economy club by 2024.

Commerce and industry minister Piyush Goyal and Niti Aayog vice-chairman Rajiv Kumar also attended Saturday’s meeting, along with senior government officials.

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