A day after taking over the finance portfolio, Prime Minister Manmohan Singh regrouped his aides during the 1991 reforms push — planning commission deputy chairman Montek Singh Ahluwalia and chairman of the PM’s economic advisory council C Rangarajan.
Since Wednesday’s agenda, expectedly, focused on halting the economic slowdown, sources said the much-needed round of reforms was on the cards to fight the fall in growth, the free-falling rupee against the dollar, industrial slowdown and rising prices.
He said, “I am concerned about the way the exchange rate is going. Investor sentiment is down and capital flows are drying up… We need to revive investor sentiment — both domestic and international.”
After his meeting with Rangarajan and Ahluwalia, Singh had discussions with his principal secretary Pulok Chatterjee, chief economic adviser Kaushik Basu and finance ministry secretaries.
Meanwhile, the economic advisory council met separately to begin the spadework to tone up the broader economy. Singh told the finance ministry officials: “There are problems on the tax front, which need to be addressed.” But the government did not specify whether the budget provision to empower taxmen to scrutinise old corporate transactions – such as the Hutch-Vodafone deal of 2007 – would be reviewed.
Singh also hinted at accelerating the financial sector reforms, including those in the insurance and mutual funds sectors. “There are issues about the mutual funds industry, which need to be resolved. The insurance sector has seen a slowdown, which is not normal in a country with large unmet insurance needs.”