Modi orders meet on economy at 6.30 PM today; momentous announcement expected
Modi is going to discuss economic risks that have emerged in current scenario with rupee and fuel prices topping the agenda.
With the ongoing volatility in markets, the Prime Minister Narendra Modi has decided to hold a review meeting today at around 6.30PM. Modi is going to discuss economic risks that have emerged in current scenario with rupee and fuel prices topping the agenda. In this review meeting, it is being expected that, apart from Finance Minister Arun Jaitley, a number of other noted economists in the government will attend the meet.
The main agenda of the meeting is believed to be whether intervention on fuel prices is called for - they peaked at a level never before seen. Both petrol and diesel prices have risen at an extreme level which has sparked criticism of the NDA government ahead of 2019 general elections.
A litre of petrol in New Delhi is currently available at Rs 81.28, in Kolkata at Rs 83.14, in Mumbai at Rs 88.67 and Chennai at Rs 84.49. Meanwhile, a litre of diesel was valued at Rs 73.30 in New Delhi, while in Kolkata at Rs 75.15, in Mumbai at Rs 77.82 and in Chennai at Rs 77.49.
Government has already ruled out any excise duty cut and meanwhile states remain reluctant in reducing Value Added Tax (VAT). Therefore, what Modi decides in this meet will be keenly watched.
Second would be continuous depreciation in Indian rupee which will have the attention of this meeting. So far this year, Indian rupee has depreciated by over 12% against US dollar benchmark indices at interbank forex market.
Because of Indian rupee’s free fall, many experts have started predicting between 25 - 50 basis point hike in upcoming monetary policy by RBI. This can even lead to India’s monetary policy tightening further.
Considering the above, several major decisions are possible.