Prime Minister Narendra Modi will be holding a crucial meeting on Friday to take stock of the economy following the twin shock of the falling rupee and rising crude oil prices. At this meeting with the finance ministry officials, Reserve Bank of India (RBI) governor Urjit Patel is also expected to be present at the meeting, CNBC-TV18 reported.
Indian shares ended higher for the second session in a row on Friday as investors sentiments turned positive after the announcement of the meeting. The main agenda of the meeting is to take stock of the falling rupee, which is Asia worst performing currency. The rupee has depreciated 13% since the beginning of this year.
However, with the rupee, the prime minister is also likely to discuss other issues. Here are top things that are likely to be on Narendra Modi’s meeting agenda:
Fuel price: The fuel prices have skyrocketed in the last few days due to the double shock of rising crude oil prices and falling rupee. The high petrol and diesel prices even triggered Bharat Bandh earlier this year, in which the opposition parties led by the Congress demanded cut in the excise duty. However, top economists have warned against any populists measures.
Falling rupee: The rupee has fallen about 13% since the beginning of the year and when it was nearing close to the new mark of 73 against the US dollar, DEA Subhash Chandra Garg said that there was no reason for the rupee to fall to that level and that the government and RBI were ready to do anything to ensure that there’s no further slide.
However, Rathin Roy, member of the member of Economic Advisory Council to Prime Minister (EAC-PM), on Friday called for extreme vigilance on the rupee, saying that it depreciated against dollar much more than the acceptable parameters of 4-6% per annum.
Fiscal deficit: The government may also discuss the way to achieve the fiscal deficit target to 3.3% in the face of global uncertainties adding to the government’s expenditures. On Thursday, a finance ministry official indicated that the government is most likely to stick to its gun on fiscal deficit instead of announcing any populist measure.
Oil price: Even as the OPEC announced an increase in the oil supply, bringing down oil prices temporarily, geopolitical tensions in Venezuela and Iran sanctions led to the jump in prices again. The prime minister may discuss ways in which the government can avail cheaper oil as Iran sanctions kicks-in from September.
Current Account Deficit: Prime Minister Narendra Modi is also expected to discuss the widening current account deficit. As per the RBI data, the CAD in the first quarter of the financial year expanded to 2.4% of the GDP.