FM Nirmala Sitharaman to meet industry, take steps to improve economy

Finance minister Nirmala Sitharaman on Monday said she will hold consultations with the industry before "very quickly" deciding on the steps to improve the state of the economy amid concerns of a deepening slowdown.

To take stock of the economy and address sector-specific issues, the minister will hold a series of meetings starting Tuesday with the representatives of micro, small and medium enterprises (MSMEs), followed by automobile sector, industry associations, as well as financial market and real estate sector stakeholders.

"The essential idea behind the series of meetings is to hear from them and very quickly after that come up with something which will help those sectors which are giving their views to us," Sitharaman told reporters after chairing a meeting with the top management of the PSU as well as private banks in the national capital. The meeting is the first in the series to discuss the current economic situation.

The finance minister took stock of the credit flow by banks to key sectors, mainly non-banking financial companies (NBFCs), automobile and MSME sectors. She reviewed the performance of the banks with the top management of public sector banks (PSBs), as well as private banks that included HDFC Bank, ICICI Bank, Axis Bank, Kotak Mahindra Bank and CitiBank. RBI deputy governor N S Vishwanathan was also present in the meeting. Overall credit growth from the banking system continues to be at 12%, lower than the growth of 13.3% at the end of March.

The minister is scheduled to meet the representatives of the MSME sector today (Tuesday), followed by automobile sector on Wednesday, industry associations on Thursday and financial market stakeholders on Friday. On Sunday, she will hold a meeting with the representatives of real estate sector and homebuyers.

Among various sectors that are reeling under slowdown, the automobile sector has seen the sharpest decline in sales. "The government will factor in the takeaways from these consultations for appropriate policy responses to maintain a high growth trajectory and address sector-specific issues," the government said.

The Gross Domestic Product (GDP) growth slipped to a 20-quarter low of 5.8% for the quarter ending March 31.

The finance ministry will also hold discussions with the representatives of foreign portfolio investors (FPIs) to hear out their concerns on higher taxation that has fuelled pull out of funds from the domestic equity market. In the Budget, the FM had announced higher taxes on the individuals and trusts earning more than Rs 2 crore per year.

"I am quiet open to hearing out what they have to say," Sitharaman said. Department of Economic Affairs (DEA) secretary in the finance ministry Atanu Chakraborty will meet FPIs separately.

On the issue of sovereign foreign bonds, Sitharaman said, "Nothing more has been done.. After the mention in the Budget, there has not been much work on it… It is at the stage of announcement only," she said, adding that the ministry has been busy with passing of the three Bills in the Parliament. Nothing has been decided on tranches, amount, etc, she further added. The government has announced in the Budget that it would raise a part of its gross borrowing programme from external markets in foreign currencies.