Central banks need to be cognizant of growth- and growth-related priorities even while equally looking at curbing inflation, finance minister Nirmala Sitharaman said Friday, while highlighting the unnecessary priority given to interest rates as a policy tool to curb inflation.
“Obsession with using interest rates to tame inflation has a downside,” the finance minister said at the B20 Summit 2023 organised by CII in New Delhi.
The finance minister also noted that instead of looking at global slowdown concerns arising out of China, businesses needed to recognise India for its strengths, especially as the government has quelled concerns around Atmanirbhar Bharat.
“Whilst I will keep a watch on developments happening in China, I am putting my energy on India’s moment. I will rather play on opportunities that India presents,” the FM noted.
She further said that India’s commitments towards free trade should encourage businesses to come to India.
“Teamwork between finance and commerce is showing positive results. This year, we should be able to conclude the UK FTA,” Sitharaman stated.
The finance minister addressed the B20 meeting on sustaining global economic recovery and pointed to taming inflation, building infrastructure, infrastructure investment, climate change finance and diversification of global supply chains as key priority areas.
The finance minister underlined that the public sector needed to take the lead in increasing investment in infrastructure and that the private sector would follow suit.
“We are focusing on infra and bringing down the compliance burden,” the FM noted.
She pointed to India’s example, where she noted that government efforts had helped states increase their capex spending by 74% in the first quarter, whereas the centre’s capex spending had increased 59.1% from last year.
“Enhanced capex provisioning for capex is crowding in private investment. Green shoots of capex upcycle can be seen,” the FM said.
The finance minister also argued for higher investment in education and health.
On the diversification of supply chains, the finance minister was clear that the world could not afford to have more shocks to the supply chain, and there was a need to cushion against such shocks.
“Putting all eggs in one basket is not going to help,” she further highlighted.
The finance minister also called for more collaboration on the issue of climate change financing, especially as the developed world had failed to meet its $100 billion commitment. While she highlighted India’s success in meeting its climate commitments all by itself, it did call for more cooperation from the developed world.
“For India, transition will be a challenge if we are going to do it all by ourselves. We need money for transition and technology,” the finance minister pointed out.
Meanwhile, she also said that the country was working to bring changes to increase FDI investment.
