New Delhi: The full Union Budget presentation in July will provide an opportunity to initiate, as well as take forward some of the steps initiated to stem the ongoing slowdown in the economy, a senior Finance Ministry source said on Monday.
The concerns on the economy are in the areas of employment generation, boosting rural demand, consumption, as well as investment, the official added, without providing details of specific steps being contemplated in this regard.
"In general, slowdowns warrant that fiscal policy should provide a stimulus by stepping up public investment and RBI (Reserve Bank of India) monetary policy should provide a stimulus to private investment by lowering interest rates", he said.
Market analysts feel since inflation is at a lower range, RBI's next monetary policy committee (MPC) meeting may look at a cut in interest rates for a third time in succession.
Asked whether the fiscal deficit will see a revision upwards to address the economic slowdown, the source said: " It's too early to think of the fiscal deficit but at times of economic slugishness government expenditure goes up to support incomes and demand, not cut down public spending as a matter of application of policies."
Another source said that steps may be taken export and investment fronts since these are also critical determinants of growth from the supply side, adding, however, that this was not the right time to specify details.
"Let us wait till the new government formation on the exact steps but slowdown issues will be taken care of in the Budget", he said.
There is a liklihood of public investment in infrastructures and social welfare schemes, would get a leg-up in the 2019-20 Budget, he added.
The persisting slowdown has now been further reflected in the latest contraction in the Index of Industrial Production (IIP) - the first time in the last 21 months - and the third quarter GDP growth moderating to 6.6 per cent, which again is the slowest in the last 5 quarters.
The Department of Economic Affairs's (DEA) monthly report too dwelt on the slowdown.
"India's economy appears to have slowed down slightly in 2018-19. The proximate factors responsible for this slowdown include declining growth of private consumption, tepid increase in fixed investment, and muted exports" said the DEA monthly report for March.
The Asian Development Bank (ADB), the RBI and the IMF have cut India's GDP growth forecast for 2019-20 to 7.3 per cent.
The government's Central Statistics Office (CSO) has trimmed the country's 2018-19 growth forecast to 7 per cent, from its earlier estimate of 7.2 per cent.