Keeping an eye on global inflationary pressure, says FM Nirmala Sitharaman
The government is monitoring global developments, including inflationary pressures due to rising commodity prices and monetary tightening expected by central banks, and will not allow India’s economy to suffer from these headwinds, said Union Finance Minister Nirmala Sitharaman on Sunday.
“Now, with the RBI and the government working together and watching very carefully what is happening in the global financial ecosystem, we have learned lessons from the latest crisis that the Indian government faced in 2012-13 and 2013- 14,” Sitharaman said at an event hosted by industry body Ficci.
“We are quite attentive to what is happening in terms of global strategic developments, in terms of the Fed’s decision, and also in terms of global inflationary pressures; we are watching very closely, and I can assure the leaders here that we will not let the Indian economy suffer for lack of preparation,” she said.
Sitharaman said India Inc should take advantage of the ongoing recovery in the economy and step up its investment commitments. “We are at such a time when the recovery of the economy is very clear…so this recovery is going to place India as the fastest growing economy among the major economies and this will continue even during the next financial year. After the pandemic, the world order has changed and industry leaders should ensure that India does not miss the bus this time around,” she said.
In his 2022 Union Budget, Sitharaman announced record capital expenditure of Rs 7.5 trillion, including Rs 1 trillion in interest-free long-term loans to states for their investment needs.
The government expects this will also attract private sector investment, which will lead to job creation and increased demand and consumption.
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The budget projects nominal GDP growth of 11.1% for FY23, while the economic study forecasts real GDP growth of 8-8.5%. At the same time, the Survey warns of inflationary pressures, in particular due to external factors such as commodity prices.
The US Federal Reserve decided to end its bond-buying program in March and raise interest rates thereafter to control high inflation, a move other Western central banks are expected to emulate. .
So far, emerging economies like India have benefited from increased liquidity and attracted huge inflows of foreign funds. But developing economies could now face outflows as the US Fed scales back its asset purchases.
The Reserve Bank of India is expected to present its policy on February 10 and is expected to take other measures, such as raising the reverse repo rate to reverse pandemic-era measures.
At a separate event hosted by industry body Assocham, the finance minister said high global crude prices were a concern for all. “Of course, but not for the airlines, the global fuel price is now a concern for all of us,” Sitharaman said, responding to a statement from Spicejet Chairman Ajay Singh, who drew his attention to the issues facing the sector is facing. after three waves of the Covid-19 pandemic.
Conceding that the sharp rise in fuel prices, as well as severe movement restrictions following the third wave of Covid led by the Omicron variant, have hit the aviation sector, Sitharaman said she would discuss the demand for industrial status for the aviation sector with the banks.
She also said that the issue of placing petroleum products under the GST will be discussed at future meetings of the GST Board.
Responding to concerns expressed over the dumping of ferrous and non-ferrous metals, the finance minister said that while the steel industry needs to bring domestic prices in line with international trends, the interests of MSME user industries must also be taken into account.
“We don’t want dumping but we also want prices at reasonable levels. Now that the economy is recovering, industry wants cheap raw materials. This request has particularly come from MSMEs, and we must bear this in mind before increasing anti-dumping duties,” she added.