FM Nirmala Sitharaman trashes fear of India slipping into recession or stagflation

Finance Minister Nirmala Sitharaman.

There is no question of India slipping into a recession or stagflation, Finance Minister Nirmala Sitharaman said in Parliament, as the Opposition mounted questions against the government over the recent spurt in the rate of inflation.

Sitharaman, while dismissing the charge of keeping the price of essential items in check, said the government has not only controlled inflation but has efficiently managed the country's debt.

"India's general debt is also in a good position compared to many other countries," the finance minister said, during a discussion on price rise in the Lok Sabha.

Sitharaman added that despite lowering projections, India is still being recognised as the fastest-growing economy.

"Indian economy is showing very positive signs and has held inflation well within seven percent despite global headwinds," the minister said. However, she added that global trade, which has been hit by the Russia-Ukraine war after being battered by the COVID-19 pandemic, has not returned to normalcy.

The minister claimed that the government has acted to reduce the cost of imports, and has drastically lowered duties on edible oils. As a result, prices of edible oil have "corrected sharply", she stressed.

On the criticism over the recent hike in tax rates on a number of products, Sitharaman told the House that GST Council had taken the decision after detailed discussions.

"GST Council decided to impose tax on some pre-packaged and labelled food items in order to curb tax leakage...State representatives were part of the multi-layered decision-making process. It is hence unfair for the states to blame the Centre", she said.

Sitharaman reiterated that there is no GST on loose milk and other loose food items.

The finance minister also mentioned that steel prices have reduced from the recent highs, and that it will benefit MSMEs.

She further added that India has adequate foreign exchange reserves, and the macroeconomic fundamentals are "perfect".

Sitharaman criticised the Congress party for staging a walkout during the discussion. "Congress MPs are walking out, their hypocrisy has been exposed,” she said.

Sitharaman, before concluding her address, noted that the GST compensation cess has been extended until 2026 and that one month's compensation payment is yet to be paid to states. She also called upon the state governments of Tamil Nadu, Telangana, Rajasthan, Jharkhand, Punjab, Kerala and Chhattisgarh to clear the pending dues of power generation and distribution companies.