Mumbai, Aug 4 (IANS): With the economy going through a slowdown, the NITI Aayog is of the view that India's GDP may contract around 5.1 per cent in the current fiscal.

In a recent presentation to Prime Minister Narendra Modi and the Finance Ministry, it has suggested ways to boost demand, specifically in the key sectors of automobiles and real estate.

As per NITI Aayog, the long-awaited scrappage policy should be brought in to help the automobile sector. It has also recommended removal of cess on automobiles.

In a bid to revive demand in the realty sector, it has suggested reinstatement of the subvention scheme which was disallowed last year.

Further, the think tank has also recommended government spending as private expenditure and investment is likely to take a backseat in the current scenario.

NITI Aayog, in its presentation, also noted that manufacturing sector growth and capacity utilisation was severely low even before the nationwide lockdown was implemented.

Among several other recommendations, the think tank also recently suggested the creation of a Dak Bank -- postal bank -- by merging the regional rural banks, among other recommendations to the government.

The NITI Aayog has suggested the over 1.5 lakh post offices in the country should be made outlets for the proposed Dak Bank, sources said.

Further, it has also suggested easier norms for granting bank licenses.

In another major recommendation, it has suggested privatisation of three banks - Punjab & Sind Bank, UCO Bank and the Bank of Maharashtra, said people in the know.