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Business News/ Politics / Policy/  Govt to take steps to create jobs, but no abrupt change in public spending
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Govt to take steps to create jobs, but no abrupt change in public spending

Two finance ministry officials say the government is working on measures that will create more jobs and help raise income levels in view of the slowing down economy

The finance ministry is very keen for the Reserve Bank of India (RBI) to further ease the monitory policy that will bring down cost of capital to businesses and improve their competitiveness in the export market. Photo: Pradeep Gaur/MintPremium
The finance ministry is very keen for the Reserve Bank of India (RBI) to further ease the monitory policy that will bring down cost of capital to businesses and improve their competitiveness in the export market. Photo: Pradeep Gaur/Mint

New Delhi: The government is working on measures that will create more jobs and help raise income levels in view of the slowing economy, but no step impacting its revenue and spending balance will be taken outside the annual budget, two finance ministry officials said.

While measures under consideration include those meant to make doing business easier and to attract fresh investments, structural changes in the government’s fiscal discipline will not be taken without Parliament’s sanction, one of the officials said on condition of anonymity.

“We keep making assessments about trends in the economy. Our revenue receipts as well as spending—which has been frontloaded by way of advancing budget announcement, are as expected. Any measures leading to fiscal expansion will only come from budget," said the official quoted above. Budget 2017-18, announced on 1 February as against the last day of the month on which it has traditionally been done, has led to better utilization of funds in the economy, said the person.

Finance minister Arun Jaitley had said at a conference last Thursday that “appropriate actions" will be taken at the “right time" to revive the slowing economic growth, raising hopes for a massive expansion in public spending. Economic growth in the June quarter had slowed down to 5.7%, compared to 6.1% in the preceding three months.

The second official, who also briefed on condition of not being named, said that the government’s commitment to respond adequately to the challenges in the economy does not necessarily mean what is under consideration is an immediate deviation from the fiscal consolidation plan without analyzing implications.

The finance ministry, however, is very keen for the Reserve Bank of India (RBI) to further ease the monitory policy that will bring down cost of capital to businesses and improve their competitiveness in the export market. “There is scope for monetary easing given inflation projections," said a third official, who also did not wish to be named.

In the second volume of the Economic Survey released on 11 August, the ministry said that retail inflation at the end of March 2018 will remain within RBI’s medium term target of 4%.

The central bank on 2 August cut the repo rate at which it infuses liquidity in the banking system to 6%, the lowest since November 2010, from 6.25%, citing a sharp fall in consumer price inflation and the need to boost investment demand in the economy.

“This rate reduction should have ideally prompted the banks to lower their lending rates. However, given the problem of non-performing assets (NPAs), banks would find it difficult to fully pass on the benefits to the borrowers," said consultancy firm EY in a note on economy on Friday.

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ABOUT THE AUTHOR
Gireesh Chandra Prasad
Gireesh has over 22 years of experience in business journalism covering diverse aspects of the economy, including finance, taxation, energy, aviation, corporate and bankruptcy laws, accounting and auditing.
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Published: 23 Sep 2017, 06:25 PM IST
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