Finance minister Arun Jaitley has said the government is working on various plans, including a hike in government spending in order to take the economy back to its potential growth path.
Reports quoting senior finance ministry officials said the idea is to loosen the government's purse strings targeting an additional spending of Rs50,000 crore in the current financial year (2017-18) in order to stimulate the economy.
The finance minister had earlier held a meeting with Prime Minister Narendra Modi before announcing plans for stimulating the economy.
A Reuters report quoting finance ministry officials said the additional expenditure in the current fiscal is part of the plan to revive growth of the country's gross domestic product that has been slowing over the past six quarters.
Jaitley, while conceding the fall of GDP to 5.7 per cent in April-June quarter as a ''matter of serious concern'', said his ministry, in consultation with Prime Minister Narendra Modi, would roll-out a series of steps to rejuvenate growth.
''We have taken note of all economic indicators which are available … the government will take any additional moves which are necessary. I am not in a position to announce today in the press conference. I will be certainly consulting the Prime Minister before that and when we decide, you will come to know,'' PTI quoted Jaitley as saying.
Critics of the Narendra Modi-led government still blame the falling growth rate on the demonetisation drive and the hasty implementation of the goods and services tax (GST).
Even former Prime Minister Manmohan Singh on Tuesday described demonetisation and the hasty roll-out of GST as ''double whammy'' for the economy.
''When 86 per cent of currency is withdrawn from circulation, plus GST, which was put in practice in haste.. lot of glitches are now coming up, it was bound to affect GDP growth adversely,'' Singh said, while speaking to a news channel.
Jaitley, on Tuesday, held talks with Prime Minister Modi to discuss the lacklustre growth in GDP. The finance minister has been also holding rounds of deliberations with the commerce minister and railway minister, along with top bureaucrats, to plan the strategy for bringing the growth rate back above 7 per cent.
The Modi government, which promised two-crore jobs per year, was banking upon a robust growth in the economy to meet their targets. However, the GDP, which was wavering between 7.6 to 8 per cent last year, faced six consecutive drops.
According to experts, the growth rate went down due to the decline in business activities of small, medium-scale and informal sector, which accounts for nearly 90 per cent of jobs in the Indian market.