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No question of India getting into recession or stagflation: Sitharaman

Union Finance Minister Nirmala Sitharaman speaks in the Lok Sabha during ongoing Monsoon Session of Parliament, in New Delhi, Aug. 1, 2022 (Photo: PTI)Premium
Union Finance Minister Nirmala Sitharaman speaks in the Lok Sabha during ongoing Monsoon Session of Parliament, in New Delhi, Aug. 1, 2022 (Photo: PTI)

  • Despite all adversities, India is the fastest growing economy in the world, says Nirmala Sitharaman
  • Sitharaman said the comparisons made by the opposition to the economic situation in Sri Lanka and Pakistan are incorrect

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Finance minister Nirmala Sitharaman on Monday dismissed concerns of stagflation or a recession in the Indian economy. In her reply to a discussion on price rise in the Lok Sabha, the minister said that the economic fundamentals of India are still “perfect". “Even as the entire globe’s growth is being reviewed, re-assessed, re-estimated, each time, we remain at the highest...There is no question of India getting into recession or stagflation," she said.

She said the country is facing global challenges, including geopolitical tensions, along with domestic financial issues such as non-payment of dues to power generation companies by state discoms.

“Despite all these adversities, India is the fastest growing economy in the world," she said. Sitharaman also stressed that the country has “sufficient forex reserves", saying comparisons made by the opposition to the economic situation in Sri Lanka and Pakistan are incorrect.

During her more than hour-long reply, the finance minister also compared India with major economies to show that the country is in better shape even in these challenging times.

“Debt-to-GDP ratio of several countries are in triple digits, and this includes countries like Japan, US, France, Canada, Greece, Italy, Portugal and Spain.

Even (in terms of) general government debt that is central and state debt put together, India is in a far better position than its peers," she said, citing data from the International Monetary Fund (IMF).

She said the health of banks is also equally important for looking at the economy, adding that about 4,000 banks in China are on the verge of bankruptcy, while in India, the gross NPA of commercial banks has declined to 5.9% in FY22.

On inflation, the minister said the Centre is trying to bring retail inflation below the 7% mark.

She said former RBI governor Raghuram Rajan had pointed to RBI’s recent efforts to tame inflation, including the hikes in interest rate.

Outlining the government’s steps to ease price rise, she said the government had lowered the import duty on palm oil and sunflower oil, leading to a fall in edible oil prices in June.

 

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