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Not yet time to drop caution on growth front, says Sitharaman

The Union Minister also hinted at sustained support to exports, as “these are facing external headwinds” and steps to attract more foreign investment.

Union Finance Minister Niramala Sitharaman at FE India’s Best Banks Awards. (Express Photo)

By FE Bureau

Union Minister for Finance and Corporate Affairs Nirmala Sitharaman said on Friday that the International Monetary Fund’s latest projection of a 7.4 per cent economic expansion for India in FY23 was broadly in sync with the Government’s own assessment — but added that given the downside risks from external factors, it was not yet time to drop caution on the growth front.

Speaking at an interactive session moderated by Financial Express editor Shyamal Majumdar before giving away the FE Best Bank Awards in Mumbai, Sitharaman said that robust corporate tax collections were a clear sign that private investments were picking up on the promise of durable consumption demand.

The Union Minister also hinted at sustained support to exports, as “these are facing external headwinds” and steps to attract more foreign investment. “We (want to) draw in more (foreign) investments into India so that the growth momentum is not lost. We are definitely working on this,” Sitharaman said.

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She said that rather than the question of what constituted “freebies”, what she was more concerned about was the tendency to shift the burden of freebies onto “someone else” like the electricity discoms instead of funding these out of the budget.

The Union Minister also hinted at sustained support to exports, as “these are facing external headwinds” and steps to attract more foreign investment. (Express Photo)

Political parties making electoral promises should make adequate budgetary provisions to take care of the expenditures, she reiterated. “It is one thing to empower people and provide them assistance to make sure that they can come out of the mire in which they are, and be able to stand on their own. But it’s totally a different thing when you talk about it in the sense of entitlement,” the Minister said.

The contentious issue of “freebies” gathered traction after Prime Minister Narendra Modi last month cautioned against the “revari culture” under which votes are sought by promising freebies. In multiple hearings, the Supreme Court has also expressed concern over the “the culture of freebies ahead of elections”.

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Sitharaman, meanwhile, said the Finance Ministry doesn’t have any plan to impose any charge for UPI (Unified Payment Interface) services and that the concerns of service providers over cost recovery have to be met through other means.

“We see digital payments as a public good, people should be able to access these facilities freely, so that the digitisation of the Indian economy becomes attractive for people and also through digitization, we achieve a higher level of transparency… Therefore we still think it’s not time for charging it,” she said.

Sitharaman, meanwhile, said the Finance Ministry doesn’t have any plan to impose any charge for UPI (Unified Payment Interface) services. (Express Photo)

The Minister said if that budgetary support to the digital payment ecosystem was found inadequate, it could be addressed separately. The government has budgeted Rs 1,500 crore each for FY22 and FY23, respectively, to compensate for the Merchant Discount Rate (MDR) foregone on UPI and RuPay debit card transactions.

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Ahead of the FY23 Budget, the Payments Council of India had requested a Rs 4,000-crore compensation to cover revenue losses worth Rs 5,500 crore on account of the zero-MDR regime.

In a discussion paper earlier this month, the Reserve Bank of India had sought feedback from stakeholders on the possibility of imposing a tiered charge on the UPI services. However, the Central Bank later said it had neither taken any view nor had any specific opinion on the issues raised in the paper.

The Financial Express Best Bank Awards 2022

First published on: 26-08-2022 at 08:02:54 pm
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