Underscoring that the country’s economic growth remains a priority for the government, Finance Minister Nirmala Sitharaman said Wednesday that job creation and equitable distribution of wealth were the other focus areas.
She also pointed out that inflation has come down to a “manageable level” over the past few months.
Speaking at the India Ideas Summit, organised by the US-India Business Council (USIBC), Sitharaman said: “Some of course are red-lettered (priorities), some may not be. Red-lettered ones would of course be jobs, equitable wealth distribution and making sure India is moving on the path of growth. In that sense, inflation is not red-lettered. I hope it doesn’t surprise many of you. We have shown in the past couple of months that we were able to bring it to a manageable level.”
According to the latest official data, retail inflation softened to 6.71 per cent in July due to moderation in food prices but remained above the Reserve Bank of India’s comfort level of 6 per cent for the seventh consecutive month.
“I am confident that India’s key strengths – the size and diversity of the Indian economy, availability of skilled manpower and the progress made in digital transition – will enable the country’s economy to comprise 30 per cent of the global GDP in the next 20 years. In the process, India and the US will become the engines of global growth. Both nations have much in common and can collaborate for global good in these difficult and challenging times,” Sitharaman said.
The government’s fiscal policy, she said, has been very targeted, driven by exhaustive consultations. “There was no overprinting of currency or flushing of the economy with money,” she said.
On the aggressive stance on rate hikes taken by the US Federal Reserve and the European Central Bank, she said the RBI would be able to manage the volatility emerging from these moves by global central banks.
“We are confident that irrespective of the steps central banks around the world would take to protect their economy, to ensure that their economy is given enough monetary support… We are confident that the steps that the US Fed may take or the European Central Bank may take, the Reserve Bank is fairly clued into the developments which are happening all around and they are confident of handling the Indian monetary policy without major blips or rise and falls,” she said.
Additionally, referring to the global energy crisis triggered by the ongoing Russia-Ukraine war, Sitharaman said, uncertainty over availability of crude, natural gas continued.
“At a time when we were looking at moving out of coal, and I remember in two of my budgets placing emphasis that we shall move out of thermal, we shall close some of the legacy thermal power producing and then get on to greater emphasis on a transitional energy, which is natural gas and then equally ramp up our renewable investments and production, now this has received a big jolt,” she said, referring to the energy crisis.
“Therefore, now we are also saying we need to fall back on coal for some more time and it worries me about how this coal dependency again will have to be cut down and we can get back to the platform of transitioning into a less environmentally threatening source. This jolt is not just for India but for everybody. But for India, it becomes even more onerous because of the size of our country,” she said.
India’s demographic strength, she said, is that it is skilled, high-end, technically savvy, providing solutions to the world and the size and diversity of the Indian economy offers a great lot of opportunity.
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“If India and the US were to work together, within the next 20 years, we shall reach a combined 30 per cent of the size of the global economy. We shall be contributing to the global GDP, to the extent of 30 per cent. That itself will make India and the US the engine of global growth,” she said.