New Delhi, June 27: Prime Minister Manmohan Singh, who now also holds the finance portfolio, today met Montek Singh Ahluwalia, deputy chairman of the Planning Commission, and PMEAC chairman C. Rangarajan and other senior finance ministry officials to review the economy, which is going through a lean patch.
After the meetings, Singh said, "We need to revive investor sentiment, both domestic and international. There have been many factors that have contributed to this general negative mood. There are problems on the tax front which need to be addressed."
According to sources, Ahluwalia and Rangarajan separately briefed Singh about the economic situation.
"I am happy to meet all of you in a new context with me looking after the finance portfolio once again. Apart from a brief spell in 2008, I have been away from the details and nitty-gritty of finance for a long time," he told top finance ministry officials.
"Therefore, I depend on all of you to give me sound advice on not just matters relating to the finance ministry but all aspects of the government and the economy as a whole," he said.
"On the financial side, we need to see how we can improve matters. There are issues about the mutual funds industry which need to be resolved. The insurance sector has seen a slowing down, which is not normal in a country with large unmet insurance needs. This needs to be looked into," he said.
In 2011-12, the mutual fund industry shrank 1.6 per cent in terms of assets under management.
The Prime Minister said the slowdown in the economy was a combination of both internal and external factors and promised that steps would be taken to boost growth.
"There are some external reasons and we need to work towards making our country resilient in meeting these external challenges. However, there are many domestic reasons as well. We need to address these quickly. We need to work to get the economy going again and restart the India growth story," Singh said.
"Immediate emphasis is to manage the balance of payment for which all policies should be directed to help institutional investment in India," he said.
The discussions covered controlling fiscal and current account deficits. The fiscal deficit in 2011-12 at 5.76 per cent and the current account deficit at 4 per cent are quite high for the economy.
There is an air of expectation that Manmohan Singh, who in the early 1990 had steered the country out of an economic crisis by ushering in reforms, will deliver again.
He has taken charge at a time the country's economic growth in the quarter ended March slumped to 5.3 per cent, the lowest in nine years, while the annual rate of growth in 2011-12 slipped to 6.5 per cent after hovering above 8 per cent for the previous two years. The rupee hit its lowest level of 57.33 to the dollar on May 22.
Montek Singh Ahluwalia said Singh discussed the "current economic situation and steps that needs to be taken to boost growth".
The government has to undertake five critical tasks to send a positive signal to investors. It has to initiate steps to cut subsidies to reduce expenditure; fast-track FDI reforms to bring in hard currencies; initiate insurance and pension reforms; get infrastructure spending to deliver the goods; and kickstart tax reforms through the goods and service tax and the direct taxes code.