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At a time when the economy is grappling with multiple problems on both the external and internal fronts, Finance Minister P Chidambaram on Monday brainstormed with his officials to assess the situation and draw an action plan for the next three months.
In a three-hour long meeting with top officials from the departments of revenue, expenditure, financial services and disinvestment, the finance minister deliberated upon the measures taken by each of these, on both the policy and administrative fronts, and on the areas of improvement.
“The finance minister took stock of the situation. We discussed the plan of action for the next few months. Each department gave its suggestion,” said a finance ministry official, who did not wish to be identified.
Officials from the Department of Economic Affairs (DEA), which is in focus these days amid falling currency and equity markets, would be meeting Chidambaram separately on Tuesday to discuss the issues of the fall in markets and rupee along with a high current account deficit (CAD) and a high retail inflation.
The meeting would come a day after the rupee hit another life-time low, breaching Rs 63 against the dollar during intra-day trade. North Block mandarins are likely to discuss the problem in the light of measures taken by the Reserve Bank of India (RBI) last week, which were perceived by investors as capital flows.
Another official said the finance minister takes such review meetings at regular intervals and this time, four departments were called on a single day because of the current economic situation. Issues like disinvestment target, tax revenue target, expenditure, subsidies and fiscal deficit were discussed.
On August 14, RBI had announced measures to stop the flight of dollars from the country. These included curbs on Indian firms investing abroad and on outward remittances by resident Indians.
As the markets lost sharply on August 16, the finance ministry emphasised it had no intentions of imposing capital controls and the fall was mainly because of knee-jerk reaction by brokers and job data in the US.
DEA Secretary Arvind Mayaram had insisted the government would not take any further measures to curb imports and restrict dollar outflows.
On August 13, the government had increased customs duty on gold, platinum and silver to 10 per cent to curb their demand and rein in CAD at 3.7 per cent of the gross domestic product this financial year. The increase would bring an additional Rs 4,830 crore for the exchequer.
