Nirmala Sitharaman dodged a recession by keeping a watchful eye on inflation and deftly dealing with the epidemic.
Wednesday, Finance Minister Nirmala Sitharaman stated that the administration is keeping a careful eye on inflation to ensure no price increase. She stated this in response to the opposition’s heated rhetoric regarding price increases. She stated that India is “somewhere very close” to doubling its GDP and asserted that the government’s response to the pandemic disruptions prevented the country from entering a recession like so many others.
The minister was responding to a Rajya Sabha discussion on Supplementary Demands for Grants, which the Lok Sabha authorised the government to spend an additional Rs 3,250 billion on in the current fiscal year.
During the debate, the Opposition attacked the government’s economic management and issues such as unemployment and inflation. Sitharaman responded in kind, criticising the Congress, the Left, and other parties.
The Opposition accused the administration of “gross underestimation of expenditures” in the Budget and inquired whether there was any “misplaced emphasis” while allocating the cash.
In response to the criticism, Sitharaman stated that it was not uncommon for governments to submit Supplementary Demands for Grants and expressed confidence that the fiscal deficit would not exceed the target in 2022-23 due to sufficient revenue buoyancy to cover the additional expenditures of Rs 3.25 lakh crore.
People’s fears that this occurred because we were unable to estimate it accurately in the past, and that we are thus implementing a correction, are not well based. She explained that unforeseen circumstances necessitated the extension of more assistance.
Former finance minister P Chidambaram wanted to know how the government intends to pay for the higher expenditures. “The government made it abundantly clear in September that we will not alter our borrowing timeline… We have not revised our borrowing plans, which means we are certain that the money we generate will be sufficient to cover the cost of this expansion,” she said.
Many countries, including huge developed economies, are facing recession, according to Sitharaman, because “they handled the Covid differently than we did.”
“Because the trend was to put money in the hands of the people, go ahead and create notes,” she added, saying that even Chidambaram had at the time urged the government to ‘borrow, spend, and even print money to jumpstart the economy. “As we approach the end of the calendar year 2022, we should consider the negative impact of the implementation of such a suggestion in other countries, where recession may be occurring,” she said, adding that India avoided recession due to the “targeted manner” in which it provided relief during Covid.
She refuted assertions that private sector investments were declining and maintained that private sector capex is occurring due to government programmes, such as the production-linked incentive system.
She stated that jobs are also being generated and argued that the net payroll addition in September was 46% higher based on EPFO figures. “Additional entries have increased by 46% compared to the prior year. Consequently, it also introduces an aspect of formalisation,” she explained.
According to the monthly Labour Force Survey report, the urban unemployment rate in the July-September quarter of 2020 was 7.2%, compared to 8.3% in the July-September quarter of 2019. “Consequently, unemployment rates are declining,” she stated.
She stated, in reference to the price situation in the country, that “we are keeping a close check on inflation-like concerns,” which are presently irrelevant due to the fuel and fertiliser crisis on the foreign market. She stated that WPI inflation has fallen to a 21-month low of 5.85% and wholesale food inflation is 2.170%.
In response to claims that the government works for large corporations, Sitharaman stated that the Modi administration operates under the premise of “development for all and appeasement for none.” She inquired as to whether programmes such as Jan Dhan, JAM Trinity, PM Ayushman, Ujjawala, Ujala, and PMGKY were intended for corporations.
Referring to the Adani group’s development of the Vizhinjam seaport in Kerala, she stated, “One port was handed out on a silver platter to one of the big As, which is frequently referenced by the media. They were invited with the request to develop the port. This was the Congress. Afterwards, communists arrived. They did not retract their statement. When developing a port, you require the participation of these corporations. Both the Congress and the Communists”
“It is acceptable when projects are awarded through an open and transparent bidding process to a specific corporation. But when we do so, it will be said, “you are merely handing it to Ambanis and Adanis.” The state of Rajasthan has given land to a major corporation. “Other states are likewise acting similarly,” she noted.
