India doing ‘much better’ than its peers

Finance minister Nirmala Sitharaman on Tuesday said that the Indian economy is in a much better condition to compared to other economies in its peer group and many developed countries.

In her reply during a discussion on price rise in the Rajya Sabha, Sitharaman said that the macro economic fundamentals of the country are strong. She also cited the loans sought by Bangladesh, Sri Lanka, Pakistan from International Monetary Fund (IMF) to highlight the better economic condition of India.

“Indian economy compared to the situation prevailing in many of our peer groups and compared to the situation in many of the developed economies is definitely much better,” she said adding that the government is not in denial about the price rise situation.

Reiterating that global factors are leading to the elevated inflation levels in India, she said that both the Centre and the Reserve Bank of India (RBI) are making efforts to bring the retail inflation levels below the 7% level.

She said that the government have taken up a targeted approach, based on inputs from the ground to tackle inflation.

In June, India’s retail inflation rate stood at 7.01% compared to 7.04% in May 2022, according to data released by the Ministry of Statistics and Programme Implementation showed. This was the sixth consecutive month that the CPI data breached the Reserve Bank of India’s (RBI) upper inflation tolerance level of 6%.

In her rebuttal on several issues taken up by the opposition during the discussion on price rise, the finance minister said that the recent decision on imposition of GST on packaged food items was taken after detail discussion at the the GST Council which includes the finance ministers of all the state including the state governments headed by opposition parties.

“All states at the GST Council agreed to proposal to levy 5% GST on pre-packed, labelled food items. Not one person who spoke against (the decision),” she said.

She noted that prior to the discussions at the GST Council, the subjects were taken up by the fitment committee and the group of ministers (GoM). She also said that even before the introduction of GST, states used to tax these items, at “higher” rates compared to the current GST.

She also said that the flow of revenue to states has improved under the GST regime and the allegations that the revenue towards states has declined is incorrect.

The finance minister also laid down several clarifications on GST rates, saying that no GST is levied on withdrawal of cash from banks, no GST would be levied on ICUs and there would not be any tax on burial services. She, however, added that construction of a crematorium would attract GST.

Sitharaman spoke at the upper house, a day after she replied to discussion on price rise in the Lok Sabha. In her response in the lower house on Monday, she dismissed concerns of stagflation or a recession in the Indian economy and said that the economic fundamentals of India are still “perfect“.

Despite adversities both in the global and domestic front, India is the fastest growing economy in the world, she had said.