Asserting that India’s economy is showing “very positive signs” and getting “more robust”, Union Finance Minister Nirmala Sitharaman said on Monday that there is “no question” of the country “getting into recession or stagflation”.
Replying to a discussion on price rise in Lok Sabha, Sitharaman hit out at the Opposition for comparing the country’s economic conditions with that of neighbouring countries like Sri Lanka, and said India is in a far better position as its “macroeconomic fundamentals are perfect”.
“If we talk about India’s economy, then we are the fastest growing despite all the challenges — global challenges and domestic challenges,” she said.
Sitharaman also quoted former RBI governor Raghuram Rajan and said that the Reserve Bank of India has done a “very good job in increasing the foreign exchange reserves in India, insulating (it) from problems being faced by neighbouring countries, such as Pakistan and Sri Lanka”.
The Opposition, however, took on the Government, blaming it for widening inequality with rising prices and failing to provide jobs.
The Congress accused the Government of having failed in the fundamentals of economy. The TMC said the Government’s policies had left people without money to even buy LPG cylinders. Not satisfied with Sitharaman’s reply, Congress and DMK MPs walked out of the House.
Earlier, responding to Congress leader Adhir Ranjan Chowdhury, who sought to know whether India is heading towards stagflation, Sitharaman said, “There is no question of India getting into recession or stagflation.”
Observing that banks and their health are equally important for looking at the economy, Sitharaman said, “In India, the gross Non-Performing Assets of scheduled commercial banks is on a six-year low at 5.9 per cent in FY-22. So, in China 4,000 banks are on the verge of going bankrupt and our NPAs are improving.”
She said that the debt to GDP ratio of many countries, including the US, is in triple digits whereas it is 56.29 per cent in India. “India is in a far better position than its peers…Indian economy showing very positive signs,” Sitharaman said.
“First of all, as Indians we should appreciate that our people have gone through this pandemic… But in spite of that, because of the various steps taken by the Government and also by the Reserve Bank of India, we are much better than most countries,” she said.
“I recognise that everybody — Members of Parliament and state governments — all have played their role, otherwise India today will not be where it is compared to the rest of the world. So, I fully credit the people of India… we are recognised as the fastest growing economy and this is not my assessment,” she said.
At the outset of her long reply that lasted for an hour 40 minutes, with frequent disruptions by the Opposition, Sitharaman said, “I find it was more a discussion on political angles of price rise rather than data-driven concerns about prices. Therefore, I am trying to make my reply a little political.”
Comparing inflation figures during the NDA rule with that during the Congress-led UPA government, Sitharaman said, “We have held the inflation well within 7 or below. Retail inflation was over 9 per cent for 22 months during the UPA… Inflation was in double digit nine times.” In 2012-13, the Consumer Price Index was 10.05 per cent while it was 6 per cent in 2020-21, she said.
Sitharaman also hit out at the Congress for issuing oil bonds during its rule. In principle, the decision to issue oil bonds was wrong, she said, adding that the culture of freebies should be ended.
Observing that duties on crude palm oil have been reduced from 35.75 per cent to 8.5 per cent and now to 5.5 per cent, Sitharaman said, the Government has drastically brought down the duty so that edible oil prices can come down.
Hitting out at the Opposition for comparing India with neighbouring Bangladesh and Sri Lanka, Sitharaman said, “India is better than Sri Lanka and Bangladesh… Today, Bangladesh is demanding a loan of $4.5 billion from the IMF. Sri Lanka is demanding $3.5 billion. Pakistan is demanding $7 billion. India’s condition is not like that… India’s macroeconomic fundamentals are perfect… Compare with the US. What are Bangladesh and Sri Lanka.”
Responding to the Opposition demand for a rollback of GST on food items like milk, curd and rice, Sitharaman said, “This issue was discussed in the GST Council in full detail. All the state ministers were present. There was no voting and the decision was taken by a consensus.”
The Finance Minister clarified that GST has been levied only on pre-packaged and labelled items, and not on items being sold loose.
She said the decision to impose GST on these items was taken at three levels, Fitment committee, Group of Ministers and GST Council, and pointed out that representatives from Opposition-ruled states participated in the process.
None of them expressed dissent, she said, adding that the GST has been levied only on branded food items to curb leakage in revenue.
She also highlighted how there was VAT on food products like pulses in various states including Punjab, Tamil Nadu, Telangana, Andhra Pradesh and Jammu and Kashmir.
“To those who talk about GST, I want to tell them with folded hands that the GST Council is a constitutional body in which all the states and the Centre sit together and in which decisions are not taken by (Prime Minister Narendra) Modiji. The decisions are taken by finance ministers of all the states. They should tell the truth in their states. But they don’t do so,” Sitharaman said.
The Union Finance Minister also clarified that there was no GST on burial and crematorium services. On the GST compensation issue, she said that only one month’s compensation (for June 2022) is pending for states.
In his speech, Congress leader Chowdhury accused the Government of helping corporates. “The Modi government is only for two people,” he said, adding that “two-three companies” are engaged in “loot” while “the poor are forced to live in darkness”.
In response, Sitharaman pointed out that the Congress government in Rajasthan has allotted 2,397 hectares of land to an Adani company. She said that the Rajasthan government had signed an MoU with an Adani firm just a day after Congress leader Rahul Gandhi had accused the Government of favouring Adani and Ambani.