Modi to review economy at Niti meet today

New Delhi: With the queues outside banks and ATMs refusing to end even more than 45 days after the demonetisation exercise was announced and negative feedback about the move gaining ground among the common public, a concerned government has called a meeting with economic experts at Niti Aayog on December 27 to discuss the post-demonetisation scenario, and thrash out ways to deal with the situation.

The meeting comes at a time when the December 30 deadline to deposit old currency notes of Rs 500 and Rs 1,000 denomination in banks is just days away, and indications are coming from the government that the cash withdrawal restrictions may continue for quite some time. Also with speculations rife that some tax could be imposed on withdrawals has also raised concern among people.

Sources privy to developments said that during the meeting, the PM is likely to discuss the current economic situation, especially with the NSE slumping to a seven-month low of 7,908 and the Sensex below 26,000 on Monday, after Mr Modi’s December 24 remark that market participants should contribute to nation-building in a “fair, efficient and transparent way”, as he promised more “sound and prudent policies and reform measures”, which was seen by some as the government planning to impose long-term capital gains tax on profit made from investment in shares.

Though finance minister Arun Jaitley on Sunday had sought to allay the fear saying that the government has no such intention, investors were already a nervous lot.

The meeting is officially titled “Economic Policy Reform, Road Ahead”. During the meeting, around 15 economists and experts are likely to make their presentations on the prevailing economic scenario before the Prime Minister. The meeting is scheduled to start in the morning, while Mr Modi is expected to attend it during the post-lunch session, official sources said.

The Prime Minister’s meeting also assumes significance in view of various multilateral agencies and RBI lowering growth forecast for the current fiscal.

RBI has reduced the economic growth forecast to 7.1 per cent from 7.6 per cent in its monetary policy review earlier this month.

Multilateral funding body Asian Development Bank (ADB) too slashed growth projection to 7 per cent for the current fiscal, from its earlier 7.4 per cent due to the impact of demonetisation on economic activities.

Indian economy expanded by 7.1 per cent and 7.3 per cent in first and second quarters of 2016-17.