Amid increasing risk to several countries for a slowdown or recession, Indian Finance Minister Sitharaman denied a similar situation in India.
It is not possible for the Indian economy to slip into recession or experience stagflation. However, many countries around the world are facing increased risks of either a sharp slowdown or recession, the finance minister stated on Monday, while defending her government’s economic management.
Sitharaman responded to Lok Sabha debate about price rises. She also condemned the Opposition for directly blaming the central government in imposing a 5% goods-and-services tax (GST), on labeled, and unbranded pre-packaged foodstuffs.
“There wasn't a single voice against the proposal at the (last) GST Council meeting. The minister stated that it was done to stop leakages, in response to concerns about rising prices for essential foods. She said that products such as wheat, rice, suji and puffed rice won't be subject to GST if they are sold unpacked and labeled.
“All (opposition-ruled states), including Punjab, Rajasthan and Tamil Nadu West Bengal, Telangana , Kerala, Telangana , and West Bengal, agreed with the decision,” Sitharaman stated. She said that the Ukraine conflict and the pandemic have caused inflation to rise globally, and slowed down growth. She highlighted that India is in a better position than most other countries.
According to the International Monetary Fund, India's growth rate will be 7.4% in FY23, compared to 8.9% in FY22 (which was on a sharply contracted base). This is a far lower level than the inflation that many advanced economies are experiencing (inflation in America was at an all-time high of 9.1% in June), and certainly less than the UPA had to deal with in the wake of the global financial crisis.
These crises were smaller in scale than the combined effects of the pandemic, Russia-Ukraine conflict and retail inflation. However, retail inflation in the UPA period was above 9% on nine occasions. “I have no hesitation in accepting that India has inflation, but at what rate?” she inquired. For the sixth consecutive month, retail inflation has exceeded 2-6% the RBI's medium term target.
