Finance minister Nirmala Sitharaman said interest rate increases won’t affect the government’s spending plans in a conversation with Bodhisatva Ganguli at the Economic Times Awards for Corporate Excellence in Mumbai on Saturday. The winner of the Business Reformer of the year award also said that India’s reforms and measures on crypto assets have been lauded and are being closely followed. Edited excerpts:
Interest rates have gone up. Will this affect the government’s plan to revive the economy, which in the last budget was largely through a boost in capital expenditure?
Well no, because with crude prices internationally behaving the way they have and… situations such as the RussiaUkraine matter, when we prepared the budget, there was no clue about the war. But certainly… there was enough and more speculation on the rise in commodities, rise in crude, and also the global disruption in the supply chain… even as we prepared for the budget. Also to be fair, the US Fed had very clearly indicated that they were going for quantitative tightening and, therefore, I do n ..
Did the RBI rate increase come as a surprise?
The last MPC, I think, had sort of given an indication that it is time for them to also act. It is the timing which came as a surprise to many, but the act, people thought, should have been done anyway — to what extent, could have varied. So, in a way, it was a synchronised action — Australia did it… and that night US really did take the first measure. So, I see a greater understanding amongst central banks nowadays...the understanding of how to handle the recovery from the pandemic is not there ..
In the neighbourhood, high fuel prices, inflation higher than ours, and depleting foreign exchange reserves have caused a problem similar to perhaps what we faced in the early 1990s. Is that a worry and was this discussed at the Fund-Bank meetings in the context of India?
No, that was not discussed, although of course the discussions pertained to the neighbourhood… This is not a boast — I do want it to be put on record because you spoke about what was discussed in Washington. There was a great sense of admiration that we kept doing reforms even during the pandemic...that India did not allow its poor to suffer, particularly the way in which the foodgrains programme has been handled. There was also a clear appreciation… that the Prime Minister literally led from th ..
Because of geopolitical developments, subsidies are going up. The Pradhan Mantri Garib Kalyan Anna Yojana was extended recently. Will that affect the fiscal math?
As regards the food programme, we did understand (until we can) be sure of (the poor) earning their livelihood comfortably, we wanted the food programme to be extended, for which of course the outer understanding of a limit is about Rs 2.10 or Rs 2.20 lakh crore. In a way, mentally I think that calculation has been within our minds and even during the budget preparation. The fertiliser thing last year itself, even unexpectedly took a very big chunk out of our budgetary provisions .
Source Name:-Economic Times