Hemmed in by global criticism of stalled reforms and growing concerns of policy paralysis in the backdrop of a slowing economy, finance minister Pranab Mukherjee has called an unusual mid-year meeting with business leaders on June 25 to thrash out ways to revive a sagging economy and, possibly, soothe the nerves of angry industrialists.
Setting the agenda for the meeting, the finance ministry has invited a clutch of business leaders including Tata Group chairman Ratan Tata, Reliance Industries Ltd chairman Mukesh Ambani, Wipro chairman Azim Premji, chairman emeritus, Infosys NR Narayana Murthy and HDFC chairman Deepak Parekh, among others to hammer out measures to boost the economy.
“The meeting will discuss the unfinished reforms agenda,” a source said on the condition of anonymity. “It would be useful, at this point, to regroup, take stock of present situation and formulate a joint strategy, going forward,” he added.
The meeting takes place at time when a string of data has confirmed signs of a crippling industrial slowdown.
Industrial output growth crawled at 0.1% in April, pummelled by weak investment. Global and domestic business leaders have been unsparing in their criticism about the government’s economic management.
US rating agency Standard and Poor’s (S&P) on Monday raised fresh questions over India’s economy, hit by high government borrowing, rising imports and political compulsions that have stalled reforms in key areas.
Mukherjee expects business leaders to question him on plans that the government has about specific policies, particularly FDI in multi-brand retail, aviation and pensions sector, said sources.
Critics have pointed out that managing a restive alliance have consumed more time than prudent policy-making, resulting in policy missteps and fears among investors.
“An aggressive and persistent policy action which revives private investment sentiment and a simultaneous aggressive reduction in government expenditure and subsidies will hold the key to reversing the bad mix of growth,” said Chetan Ahya of Morgan Stanley.
“However, we see a low probability of these positive triggers materialising: Therefore, we believe that the macro environment is likely to remain a challenge for India in the months ahead. A sustained major effort will be needed to turn around the growth cycle.”
Business leaders have been demanding an interest rate cut by the RBI in its monetary policy review on Monday, but rising inflation have made the central bank's task difficult.
India's wholesale inflation rate galloped towards a worrisome 7.23% in April from 6.89 in March and May's price data will be released on Thursday.Besides, a falling rupee, which has already hit an all-time low of 56 to a dollar, has pushed up prices of most imported goods, fanning inflation.