Zero chance of recession or stagflation, Indian finance minister asserts
Highlighting India’s robust economic health despite the pandemic and the geo-political situation, India’s Finance Minister Nirmala Sitharaman on Monday said there was no question of India getting into stagflation or recession like other major economies of the world.
In her reply to the debate in the lower house of Parliament on price rise, Sitharaman said, “We have never seen a pandemic of this kind. All of us were trying to make sure that people in our constituencies were given extra help. I recognise that everybody — MPs and state governments have played their role. Otherwise, India would not be where it is compared to the rest of the world.”
“So, I fully credit the people of India for this. Even against adversity, we are able to stand up and be recognised as the fastest-growing economy,” she said.
The Finance Minister emphasised that due to the measures taken by the government, India is in a much better position than most countries.
“India remains the fastest-growing economy in the assessment of global agencies. This House, irrespective of the party, should feel proud of the country and its people. State governments have helped,” she stated in the Lok Sabha.
Referring to a survey, Sitharaman said there is zero possibility of India getting into recession.
Sitharaman said gross domestic product (GDP) of the US fell 0.9 per cent in the second quarter following a 1.6 per cent decline in the first quarter. “They have started calling it an unofficial recession. There is no question of India getting into recession or stagflation,” said the minister.
“The pandemic, the second wave, Omicron, Russia-Ukraine [war], and even today the largest suppliers of components in China are under lockdown, in spite of that, we have held inflation well within 7 per cent or below. That has to be recognised,” she told the lawmakers.
She further said, “Some 4,000 banks in China are reported to be going bankrupt. In India, the gross NPAs [non-performing assets] of scheduled commercial banks is at a five-year low of 5.9 per cent in 2022. So our NPAs are improving. The government’s debt-to-GDP ratio in many countries is in triple digits including Japan, Greece, Bhutan, Singapore, the US, Portugal, Spain, France, Sri Lanka and Canada. But [India’s] the central government very consciously controlled its debt and it is at 56.29 per cent of the GDP at the end of 2021-22 compared to the 59.9 per cent revised estimate that year.”
In July 2022, the minister said the country had garnered the second highest level of revenue of 1.49 lakh crore [149 billion] ever since the introduction of the goods and services tax. “In April 2022, it was 1.67 lakh crore rupees [167 billion rupees, 76 billion baht], which was the highest we had reached. This is the fifth consecutive month that collections have been above 1.4 lakh crores rupees [140 billion],” she said.
Quoting former Reserve Bank of India (RBI) governor Raghuram Rajan, she said, “On Saturday, Raghuram Rajan said that the RBI has done a good job in increasing foreign exchange reserves in India, insulating India from problems being faced by neighbouring countries such as Pakistan and Sri Lanka.
“Differentiating India from its vulnerable neighbours, Raghuram Rajan further added that ‘New Delhi is less indebted’, calling it a good sign, the minister said.
Amid Sitharaman’s reply to the debate on price rise, opposition Congress party members walked out of the house.
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