Photographer: Sanjit Das/Bloomberg

India Discusses Booster Shot for Economy as Growth Falters

  • Govt said likely to weigh stimulus of 400b rupees: TV report
  • Finance Ministry says quantum of stimulus yet to be decided

The Indian government is considering measures to boost growth after last year’s ban on high value notes and the July introduction of a national sales tax slowed down Asia’s third biggest economy.

Policymakers are monitoring all economic indicators and appropriate action will be taken at the right time, Finance Minister Arun Jaitley said at an event Thursday. The government is weighing the possibility of a stimulus of 400 billion rupees and might relax the fiscal deficit target for the year, ET Now reported, without saying where it got the information from.

The government hasn’t yet taken any decision on a package of stimulus measures, finance ministry spokesman D.S. Malik said by phone. The quantum was yet to be decided, another senior official told reporters requesting anonymity.

The Indian government has been battling concerns over growth after data released on Aug. 31 showed the economy had slowed to 5.7 percent in the quarter ended June 30, the weakest pace since 2014, when Prime Minister Narendra Modi came to power. On Aug. 30, the central bank said nearly all the bank notes banned last year as part of a plan to check tax evasion had been returned, reinforcing perceptions of the futility of a move that caused immense economic disruption.

The threat of a fiscal slippage led to the slump in sovereign bonds and the rupee fell to an 11-week low. India has set a fiscal deficit target of 3.2 percent of the gross domestic product for the year ending March. It had already reached 92 percent of the budget estimate in July.

The government will announce economic measures after consulting Modi, Jaitley said on Wednesday -- a day after chairing a meeting on the economic situation.

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