Nirmala Sitharaman: Indian economy will remain on track despite global headwinds

The Indian economy is expected to grow seven per cent in fiscal 2022-23 despite global headwinds, according to Finance Minister Nirmala Sitharaman, who attributes this to a conducive domestic policy environment and focus on key structural reforms.

On Friday, Sitharaman made her remarks during the plenary session of the International Monetary Finance Committee (IMFC).

She noted that the meeting is occurring when key downside risks threaten the global economic outlook: slower growth in major economies, cross-border effects resulting from geopolitical tensions, and inflationary pressures resulting from escalating food and energy prices adversely impacting vulnerable economies.

The Indian economy is expected to grow by seven percent in FY 2022-23, despite global headwinds. The government’s focus on key structural reforms to boost growth and the conducive domestic policy environment are responsible for this.

Members of the IMFC were informed that the Indian Government has taken

measures to protect growth while managing inflation.

Over the past 25 months, the government has provided free food grains to more than 800 million vulnerable families through its extensive distribution network.

India’s digital public goods infrastructure has delivered last-mile financial services to the poor.

Today, India leads the world in digital payments innovations, with the lowest transaction costs in the world,” Sitharaman said.

For the global financial system to be safeguarded, the IMF must provide more resources to low-income and emerging nations. Sitharaman stressed the importance of concluding the 16th General Review of Quotas (GRQ) by December 15, 2023, to ensure that emerging market economies (EMES) have equal voting rights under their relative positions in the global economy.

Currently, India has a quota of 2.75 percent in the IMF, which determines voting shares in the multilateral lending agency. The quota for China is 6.4%, while the quota for the United States is 17.43%.

By conducting a general review, the IMF can assess the adequacy of quotas both in terms of the member’s balance of payments financing needs and the Fund’s ability to assist.

According to Sitharaman, exacerbated debt distress in many low-income countries poses an important downside risk to the global recovery. As a result, the IMF should provide the necessary support in order to mitigate these risks.

In this regard, she welcomed the recent announcement of the establishment of a new food shock window by the International Monetary Fund.

Concerning climate change, she emphasized the importance of a multilateral approach based on the principles of equity, common but differentiated responsibilities, and individual capability.

With its updated Nationally Determined Contributions, India has set out an ambitious climate action path that shows its commitment to decouple economic growth from greenhouse gas emissions at the highest level.

According to Sitharaman, “the transfer of climate finance and low-cost climate technologies has assumed critical importance.”

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