HomeIndiaInflation to further decline;...

Inflation to further decline; govt on track to meet fiscal deficit target: FM

NEW DELHI: Finance minister Nirmala Sitharaman on Wednesday exuded confidence that inflation would further decline and the government is on track to meet its budgetary target for deficit and said that there is no fear of stagflation in India.

Replying to the debate on first batch of Supplementary Demands for Grants 2022-23 in Lok Sabha, the finance minister said inflation has come down and it is now in the tolerable band of the RBI.

Inflation has been declining since April 2022 and it is declining further, she said.

As per the law, Monetary Policy Committee headed by RBI Governor has been given task of maintaining inflation at 4 per cent with the upper tolerance limit of 6 per cent and the lower tolerance limit of 2 per cent.

“We will bring it down further for the sake of common people,” she quipped saying the issue is being raised by Congress during whose regime inflation was in double digit.

Prime Minister Narendra Modi and his group of ministers are constantly watching and making periodic interventions and taking measures to keep inflation under check to ensure that the poor do not have to bear the extra financial burden, she added.

Several supply-side measures have been taken by the government to address inflation, including reduction in excise duty by Rs 8 per litre on petrol and Rs 6 per litre on diesel on May 21, 2022, prohibition of export of wheat products, imposition of export duty on rice, and reduction in import duties, she said.

In addition, the government has imposed stock limits on edible oils and oil seeds, and the inclusion of soya meal as an essential commodity in the schedule of the Essential Commodities Act, 1955 and imposition of a stock limit on soya meal.

The finance minister stated that there is no fear of stagflation as far as India is concerned.

Stagflation is a phenomenon when there is slowdown in economy and high inflation, she said, adding, retail inflation has come down below 6 per cent to 5.8 per cent and the wholesale price index at 21-month low of 5.85 per cent in November.

India is the fastest growing economy and lower inflation with forebearance limit, she added.

With regard to fiscal deficit, the finance minister said the government would be able to meet the fiscal deficit target of 6.4 per cent of the GDP for the current financial year.

The government is committed to the path of fiscal consolidation, she added.

On declining value of the rupee against the US dollar, she said, “Every report has told you that Indian rupee has only strengthened against the dollar…we have performed much better than many other emerging market economies.”

Exchange rate of the Indian Rupee (INR) is market-determined. INR, which had earlier weakened by 8.7 per cent against the US dollar till October 19, 2022 has since pared some of the losses and its depreciation stands at about 6.9 per cent in the current financial year till November 30, 2022.

In comparison to emerging market peer currencies, INR movement has been relatively stable.

Further, it has performed better than most Asian peer currencies, including Chinese Renminbi which depreciated 10.6 per cent, Indonesian Rupiah (8.7 per cent), Philippine Peso (8.5 per cent), South Korean Won (8.1 per cent), and Taiwanese Dollar (7.3 per cent), during the financial year.

Moreover, she said, INR has fared better than other emerging market currencies such as Turkish Lira (21.2 per cent), South African Rand (15.1 per cent) and Brazilian Real (8.7 per cent).

Speaking about banking sector, Sitharaman said, non-performing assets (NPAs) have come down drastically to 7.28 per cent at the end of March 2022 due to various measures taken by the Modi government.

NPAs declined as a result of the government’s 4Rs strategy of recognition, resolution, recapitalisation and reforms, she said.

Asset Quality Review (AQR) initiated in 2015 led to a surge in stressed accounts. It reached a peak of 14.58 per cent and then eased to 11.59 per cent.

Replying to criticism about repo rate hike by Reserve Bank of India (RBI), Sitharaman said it has touched a high of 8 per cent during UPA’s time but it is 6.25 per cent at the moment.

With the latest hike, the repo rate or the short-term lending rate at which banks borrow from the central bank now has crossed 6 per cent.

This is the fifth consecutive rate hike after a 40 basis points increase in May and 50 basis points hike each in June, August and September. In all, the RBI has raised the benchmark rate by 2.25 per cent since May this year.

The finance minister also underlined the need for reaching self sufficiency in fertilizer production as additional demand in the supplementary is towards meeting subsidy on this front.

“I want to highlight the fact that India which is largely an importer of fertilizers will have to now also start working on self sufficiency as regards fertilizer manufacturing in this country and a lot of efforts have been going on on that score,” she said.

With regard to capital expenditure (capex), she said, 54 per cent of the Budget estimate of Rs 7.5 lakh crore for FY23 has been utilised in first six months of the fiscal.

Terming Mahatma Gandhi National Rural Employment Gurantee Act (MGNREGA) as a demand driven scheme, she said allocation for this scheme has come down in recent past due to less demand.

Quoting the World Bank report, she said India’s forex reserves is one of the highest in the world and this provide a cushion against global spillover.

“Since the taper tantrum in 2013, India’s forex reserves have almost doubled and provide better coverage of external debt than other emerging market economies. India’s more resilient related to the other economies with strong growth, low private sector indebtedness, and high foreign exchange reserves, but with high public debt and a recovering banking sector,” she said quoting the report.

India’s economy is relatively more insulated from global spillovers than other emerging markets. India’s less exposed to international trade flows, she said, adding the report also highlights that India’s external position has improved considerably over the last decade.

Later, the House passed the first batch of Supplementary Demands for Grants, authorising the government to make additional expenditure of Rs 3.25 lakh crore in FY23. (PTI)

Most Popular


Please enter your comment!
Please enter your name here

More from Author

Study Narrows Down Long COVID Symptoms To Just 7

Long COVID, the medical mystery that continues to boggle the minds...

Depressed Young Adults Likely To Develop Heart Disease And Vice-Versa

Young adults or people in the 18-25 age group are at...

More Women Are Dying From ‘Preventable’ Cervical Cancer: Study

More older women have succumbed to cervical cancer in recent years,...

Read Now

Study Narrows Down Long COVID Symptoms To Just 7

Long COVID, the medical mystery that continues to boggle the minds of scientists and medical researchers, comes with an extensive list of symptoms. But a new study narrowed down the 47 reported symptoms to just seven. Published in the journal Open Forum Infectious Disease, the study by the...

Depressed Young Adults Likely To Develop Heart Disease And Vice-Versa

Young adults or people in the 18-25 age group are at risk of suffering two serious health issues: depression and heart disease. A new study found a “two-way street” relationship between depression and an increased risk of cardiovascular disease (CVD) in younger adults. According to the Johns Hopkins Medicine...

Obesity Found To Cause Alzheimer’s-Like Condition; Weight Loss Reduces Risk

Obese people are at risk of suffering a condition similar to Alzheimer’s disease. But this can be countered by healthy weight loss. A McGill University study published Tuesday in the Journal of Alzheimer’s Disease presented a correlation between obesity-associated neurodegeneration and Alzheimer’s. Using data from the Alzheimer’s Disease Neuroimaging...

More Women Are Dying From ‘Preventable’ Cervical Cancer: Study

More older women have succumbed to cervical cancer in recent years, even though the condition is  preventable. A new study from the University of California, Davis found a spike in older women suffering from late-stage cancer. And since they develop the disease at an older age, their chances...

Befitting response given to every ‘misadventure’ from LoC to LAC: President Murmu

NEW DELHI: President Droupadi Murmu on Tuesday said the government has been laying constant emphasis on modernising the military as it firmly believes...

NIA files chargesheet against IS operative for conspiring to recruit youth for terror activities in India

NEW DELHI: The National Investigation Agency (NIA) on Tuesday filed a chargesheet against an accused in a case related to a conspiracy hatched...

First-Of-Its-Kind $1 Glove Can Detect Fetal Positions To Aid Precarious Births

An ingenious innovation of a smart glove that costs less than $1 has been created with the aim to aid clinicians during birth. The study, published in the open-access journal Frontiers in Global Women’s Health, engineered the device to help healthcare staff in finding the fetal position and the...

Study Finds Threatened Sharks Being Served In Fish Fillets

The ultimate British dish--fish and chips--have takers all over the world. However, the fish served in the dish might actually be an endangered shark species.A recent study, published in the journal Food Control, found shocking samples of endangered shark species in several fish filets served at more...

Coffee With Milk Has Strong Anti-Inflammatory Effect: Study

An ardent proponent of the benefits of black coffee? You might have to change allegiance, as a new study has found coffee with milk has synergistic properties that increase its anti-inflammatory effect.The study, published in the Journal of Agricultural and Food Chemistry, found that the antioxidants from coffee combined...

All-Party Meet ahead of Budget Session held

STATE TIMES NEWS New Delhi: The government on...

This Is How Many Adult Americans Are Addicted To Junk Food

More older adults in the United States have become addicted to processed food, according to a recent University of Michigan poll. The school’s National Poll on Health Aging presented alarming findings in its January-February 2023 issue, saying that based on the latest data, 1 in 8 adults over...

Bengaluru colleges ban use of ChatGPT, the AI agent that writes assignments

At a time when the use of AI tools has grown exponentially, plagiarism is becoming an increasingly pressing issue for universities. RV University in Bengaluru has recently taken steps to curb the use of such tools, particularly ChatGPT, by banning it altogether. The move is supported by...