Finance minister Nirmala Sitharaman on Wednesday underscored inflation as a pressing global challenge that transcends borders and defies individual nations’ efforts, calling for collective action to tackle the issue effectively.
"Inflation globally is a big challenge. It doesn’t respect borders and is so contagious that no country’s efforts today are entirely successful,” Sitharaman said at the CII Global Economic Policy Forum. “The world is facing a challenge reflected in various ways in our economies,” she added, emphasizing that combating inflation requires a unified approach.
“It is incumbent upon all of us—industry, government, policymakers, citizens, and citizen forums—to work tirelessly to restore some normalcy,” she noted.
Sitharaman’s remarks come against a backdrop of mounting inflationary pressures affecting both advanced and emerging economies, driven by geopolitical tensions and supply chain disruptions.
India’s retail inflation, measured by the consumer price index (CPI), surged to 6.21% in October, a 14-month high, as food prices continued to rise. The spike breached the Reserve Bank of India’s medium-term target of 2-6% for the first time in over a year.
Food inflation, which accounts for nearly half of the consumption basket, climbed to 10.87% in October from 9.24% in September—the highest in 15 months—further straining household budgets.
Addressing global supply chain vulnerabilities, Sitharaman highlighted the role of geopolitical tensions in destabilizing economies.
“The world tasted success in spreading supply chains on the principles of efficiency and scale. But today, would there be anyone in the audience who would disagree if I say just economics doesn't prevail?” she asked.
She pointed to the challenges posed by ongoing conflicts, including the Russia-Ukraine war, Israel-Palestine tensions, and the Red Sea crisis, which have compounded uncertainties in global supply chains already weakened by the pandemic. These disruptions have particularly impacted energy-dependent economies, exacerbating inflationary pressures worldwide.
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Sitharaman called for stability in global supply chains, emphasizing that restoring them to a frictionless state requires addressing political and strategic considerations alongside economic factors.
Shifting to climate issues, Sitharaman stressed that addressing climate change demands more than rhetoric.
“A lot of promises are made on the table, but nothing is realized as much as was spoken. So climate change is something for all of us to commit ourselves, like the intensity with which we commit to for removal of poverty,” she said.
She warned of the economic toll of extreme weather events, which disproportionately affect vulnerable populations. “(We must) make sure our people don't lose their hard-earned wealth, hard-earned small assets, their lives to climate vagaries, as extreme weather events are taking away resources of the poor people,” she added.
Sitharaman argued for a broader perspective on climate challenges, extending beyond emissions to include innovation and technology in agriculture. She advocated for shifting away from water-intensive crops to coarse grains, balancing nutritional needs with environmental sustainability.
"Water-thirsty crops should be replaced by others, which are coarse grains. But yet the protein requirement of the world will also need to be addressed, so agriculture shouldn't be looked at the same fashion that we've looked at it all these years," she added.
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