Nirmala Sitharaman, the minister of finance, stated on Wednesday that there is no concern about stagflation and that the government is on track to reach the FY23 fiscal deficit target of 6.4% of GDP.
The finance minister stated in response to the Lok Sabha debate on the first batch of Supplementary Demands for Grants 2022–23 that the administration is firmly committed to the path of fiscal austerity.
On February 1st of the following year, Sitharaman would propose the budget for FY24 along with updated estimates for the current fiscal.
India has the fastest economic growth and lower inflation thanks to a spending cap, she continued.
Later, the house passed the Supplementary Demands for Grants, allowing the government to spend an additional 3.25 lakh crore in FY23.
According to the finance minister, inflation has been falling since April 2022 and is currently within the RBI’s acceptable range.
She continued by saying that Prime Minister Narendra Modi and his cabinet are continually monitoring inflation, intervening where necessary, and taking other steps to keep it under line so that the poor do not face an increased financial burden.
The government has implemented a number of supply-side measures to combat inflation, she added, including a drop in import taxes and a reduction in excise taxes on gasoline and diesel, both of which will be reduced by 8 and 6 cents per litre on May 21, 2022, respectively.
Additionally, the government set stock restrictions for soy powder, added it to the list of vital commodities under the Essential Commodities Act of 1955, and added stock limits for edible oils and oil seeds.
She asserted that “we will bring it (inflation) down further for the sake of regular people,” noting that Congress had brought up the subject when inflation was in the double digits.
Sitharaman claimed the repo rate reached a peak of 8% during the UPA’s administration but is currently 6.25% in response to criticism of the RBI’s repo rate increase.
According to the finance minister, India is not in danger of experiencing stagflation. The term “stagflation” describes the phenomenon of a slowing economy with excessive inflation.
“Every report has told you that the Indian rupee has only strengthened versus the dollar… we have performed considerably better than many other emerging market countries,” she stated in response to the rupee’s dropping value relative to the US currency.
According to her, the INR has performed better than other emerging market currencies including the Turkish lira (21.2%), South African rand (15.1%), and Brazilian real (8.7%), which have all fallen against the US dollar in the current fiscal year as of November 30.
The finance minister said that India has some of the biggest foreign exchange reserves in the world, which acts as a buffer against global spillover, citing a World Bank research.
According to the report, India is less sensitive to global trade flows, and during the past ten years, its external position has also significantly improved.
The finance minister stated that numerous actions taken by the Modi administration have resulted in a significant decrease in non-performing assets (NPAs), which will be down to 7.28% at the end of March 2022.
The 4Rs policy of the government—recognition, resolution, recapitalization, and reforms—led to a decrease in NPAs, she claimed.
Stressed accounts increased dramatically after the Asset Quality Review (AQR) was launched in 2015. It peaked at 14.58% before descending to 11.59%.
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