Govt keeping an eye on inflation: FM

The government is keeping an eye on inflation which was purely extraneous due to prices of fuel and fertiliser, even as wholesale inflation fell to a 21-month low, finance minister Nirmala Sitharaman said in Rajya Sabha in her response to the debate on supplementary demand for grants of Rs 4.36 trillion for FY23.  

“I would like to assure the house that good we are keeping a good eye on inflation like considerations which are purely extraneous nowadays because of the fuel, fertilizer prices,” Sitharaman said. She added that wholesale price index or WPI inflation was at 21-month low of 5.85%, while wholesale food inflation was at 2.17% in November 2022, in response to questions on rising inflation. 

Retail inflation based on the consumer price index which remained above the Reserve Bank's tolerance level of 6% since January this year also declined to 5.88% in November. 

She further noted that macro economic fundamentals were better compared to 2013 when India was classified as one of the Fragile Five economies. She stated that the IMF and the World Bank had described India as the brightest spot in the global economy on several occasions. 

“Real GDP growth and doubling of it is certainly a good indicator for which any government should work, but the way in which we have handled during COVID has kept us away from recession,” she said.  

Sitharaman added that buoyancy in tax revenues will help the government meet the additional expenditure that was sought through the supplementary demand for grants, which she said was needed for growth and recovery of the Indian economy, more critically for food security and fertilisers for farmers.  

“This is a demand which keeps the necessary support to those who need it,” she said. She further added that the gross additional expenditure worth around ₹4.36 trillion, including a net cash outgo of ₹3.2 trillion will not entail any change in the government’s borrowing plan. 

In her response, she also stated that gross non-performing assets of banks had declined to six-year low of 5.9% in March 2022. She noted that the corporate sector had been deleveraging its balance sheets, which was seen by the decline in core debt of the private non-financial sector.  

Sitharaman added that government had drawn on its own resources to provide resources to states for spending. She said that for FY2021-22, the amount utilised in several cesses was more than collected, pointing to the road and infrastructure collected was  ₹1.95 trillion versus Rs 2.51 trillion that was already utilised by states and highlighted similar cases in the GST compensation cess and the health and education cess among others.  

She said that private investment capex was taking place due to favourable policies such as the production linked incentive scheme (PLI).  

The Centre has introduced PLI schemes with an outlay of  ₹2 lakh crore for around 14 sectors, including automobiles and auto components, white goods, pharma, textiles, food products, high-efficiency solar PV modules, advance chemistry cells, and specialty steel. 

Post Sitharaman’s reply, the Rajya Sabha returned the supplementary demands for grants to the Lok Sabha, which will now allow the government to proceed with the additional expenditure. 

The Parliament has thus approved additional spending of ₹4.36 trillion for FY23, including over ₹1 trillion for fertilizer subsidies due to the war in Europe driving up prices of soil nutrients and their feedstocks. The net cash outgo is, however, expected to be ₹3.26 trillion, as the additional expenditure will be offset by savings from various ministries and departments or by increased receipts and recoveries totalling  ₹1.1 trillion. 

The Parliament also approved an additional expenditure of ₹80,348 crore towards food subsidies and additional funding for the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) programme. This funding will support the government’s efforts to provide food security to the poor. 

Expenditure of the ministry of petroleum and natural gas to pay cooking gas subsidies to the poor under the Pradhan Mantri Ujjwala Yojana, among others, totalling  ₹29,944 crore, has also been approved. 

About ₹46,000 crore additional expenditure was approved for the rural development ministry, which includes ₹4,920 crore for the Mahatma Gandhi National Rural Employment Guarantee Scheme.