Finance minister says no plan to print currency to tide over COVID-19 crisis

The impact of the second wave of COVID-19 on the economy is expected to be muted given the localised containment measures and rapid upscaling of the vaccination drive, Finance Minister Nirmala Sitharaman has told Parliament. She has denied any plan to print currency to tide over the COVID-19 crisis, saying the economy is on the path of recovery.

“Union Budget 2021-22 estimated India’s nominal GDP growth at 14.4 percent in FY 2021-22. The impact of the second wave is expected to be muted given localised containment measures and rapid upscaling of the vaccination drive. RBI, in its latest Monetary Policy Committee (MPC) resolution of June 4, 2021, has projected India’s real GDP to grow at 9.5 per cent in FY 2021-22 after accounting for the impact of the second wave as compared to its earlier projection of 10.5 percent,” the finance minister has told the Parliament in a written answer in response to many queries on the state of the economy.

India’s real Gross Domestic Product (GDP) is estimated to have contracted by 7.3 per cent during FY 2020-21. “This contraction reflects the unparalleled effect of the COVID-19 pandemic and the containment measures that were taken to control the pandemic. The contraction was consistent with India’s enforcement of stringent lockdowns as reflected in the Government Response Stringency Index measured by Oxford University,” the finance minister said.

Sitharaman said the “fundamentals of the economy remain strong as the gradual scaling back of lockdowns, along with the astute support of Atmanirbhar Bharat Mission has placed the economy firmly on the path of recovery from the second half of FY 2020-21.”

Sitharaman also said as part of another answer that the government had undertaken a judicious mix of both supply-side and demand-side measures in a calibrated manner to balance growth-inflation dynamics and support long-lasting growth. “As per RBI's Monetary Policy Committee's June 4, 2021 resolution, the inflationary pressures are expected to be mitigated by a normal south-west monsoon, comfortable buffer stocks, recent supply-side interventions in pulses and oilseeds market, declining caseload of COVID-19 and gradual easing of movement restriction across states,” she said.