Sitaraman on Inflation: With inflation falling below record levels, Finance Minister Nirmala Sitharaman on Wednesday said it is no longer a ‘red letter’ and the priority of the government is now to boost employment generation and growth. Besides, equitable distribution of wealth remains the other focus area, he said at the India Ideas Summit here.
“Certainly some have red letters (priorities), some may not be. Red letters will definitely provide jobs, equitable wealth distribution and ensure that India is on the path of development.
“Inflation in this sense is not the red letter. I hope it doesn’t surprise many of you. We have shown over the past few months that we were able to bring it down to a manageable level,” she said at the event.
Retail inflation touched a high of 7.79 per cent in April this year, since then it has been on a downward trend. According to official data, retail inflation moderated to 6.71 per cent in July on softening food prices, but remained above the Reserve Bank’s comfort level of 6 per cent for the seventh consecutive month. Retail inflation based on the Consumer Price Index stood at 7.01 per cent in June.
He expressed confidence that the Reserve Bank will manage the volatility emerging from aggressive rate hike stances by the US Fed and the European Central Bank.
“Despite all the challenges…we are confident that central banks around the world will do whatever it takes to protect their economies…, we are confident that whatever steps the US Fed or the ECB can take, the RBI will largely avoid this.” Connected to the developments all around and they are confident of handling the Indian monetary policy without any major surge or volatility,” he said. Last month, Federal Reserve Chairman Jerome Powell signaled more aggressive rate hikes to correct inflation, which is at record highs.
In July, the Fed raised 75 basis points for the second time in a row. The Fed’s move raised its key rate, which affects many consumer and business loans, to 2.25-2.5 percent, its highest level since 2018.
Even the ECB is expected to hike rates at the cost of developing the sector due to rising cost of living, which is at risk of rising even more. On fiscal management during the COVID-19 period, she said, India managed through a challenging time without printing money with a targeted fiscal policy.
Referring to the global energy crisis arising out of the Russo-Ukraine war, he said, the uncertainty over the availability of crude oil and natural gas continues. He also underlined the need to deepen ties between India and the US in all matters, including in payment technology. He said that India’s agglomeration is creating huge buzz around the financial sector and payments space and has also heard whether India’s agglomeration can become a global agglomeration.
“If India and the US had to act together, I think we would reach 30 per cent of the size of the global economy and we would contribute 30 per cent of the global GDP within the next 20 years. This is India and the US. will make it the engine of global growth,” he said. On data privacy and security, she said, India will introduce a new data privacy bill “at the earliest”.
“IT Minister Ashwini Vaishnav has assured that we will soon have a new Data Privacy Bill, which will be a product of consultations and will address every such concern of most of us on the Privacy Bill.”
Last month, the Center withdrew the long-awaited Personal Data Protection (PDP) Bill, 2019, to replace it with a new bill with a ‘comprehensive framework’ and ‘contemporary digital privacy laws’.
On New Delhi taking over the G20 Presidency later this year, he said India will take over the G20 chair at a very challenging time.
“This is the right time to focus on the emerging economies and address the issues of global concern through these economies. Emerging economies are going to be the center of focus,” he said.
India will chair the G20 from December 1 to November 30, 2023. India will host the G20 summit next year.
Read also: Escalation of geopolitical tensions biggest risk to India’s development outlook: Jayant Verma