New Delhi: Prime Minister Manmohan Singh Wednesday asked the policy planning and finance ministry officials to take immediate steps to improve the economy and reverse the prevailing climate of pessimism as millions of countrymen "look up to the government for progress and prosperity".
"Immediate emphasis is to manage balance of payment for which all policies should be directed to help institutional flows to India," said the prime minister.
"In the short run, we need to revive investor sentiment, both domestic and international," he told the officials and directed them to "revive the animal spirit in the country's economy".
A day after taking the additional charge of the finance ministry, the prime minister convened a series of meetings to take stock of the economy which is facing the key challenges of slowing growth, rising inflation, a huge fiscal deficit and a falling rupee.
Earlier in the day, he discussed the problem areas with C. Rangarajan, chairman of his economic advisory council, and Montek Singh Ahluwalia, Planning Commission deputy chairman.
Later, he met all the five secretaries of the finance ministry and its economic adviser Kaushik Basu. It was learnt that the discussions covered the balance of payments situation, current account deficit, depreciation of the rupee, investment climate and revival of growth.
Reviving growth is on the top of the agenda, as the gross domestic product (GDP) growth dropped to 6.5 percent last fiscal and a nine-year low of 5.3 percent for the March quarter. The Budget estimate of growth for the current fiscal is 7.6 percent, with a margin of error of around 0.25 percent.
Moreover, immediate steps are needed to boost confidence of investors, especially from the overseas, which has taken a hit after the introduction of retrospective tax laws and the new General Anti-Avoidance Rules (GAAR).
Also, the monsoon so far this year has been weaker than usual. This has raised concerns that agricultural output could fall, putting more pressure on the government to raise minimum support prices for crops. And this, in turn, could push the subsidy bill up.
Experts say a poor crop could also force the government to spend more on welfare schemes that would add to the deficit which was 5.76 percent in 2011-12.