We are conscious of inflation, it does affect planning: Finance Minister Nirmala Sitharaman

Finance Minister Nirmala Sitharaman

A day after presenting her fourth Union Budget, Finance Minister Nirmala Sitharaman said on February 2 that the government at the Centre is conscious of inflation and it is affecting planning.

In an exclusive interview to Network18, the finance minister said that all economies across the globe are worried about inflation and acknowledged the fact that it does affect financial planning.

When asked that though India's consumer inflation has remained in the four-to-six percent range, if it goes up, could it affect planning, she said: “I think globally all economies are worried about inflation. That is not to say, okay, so what? Does it affect your planning, yes it does, and we are conscious of inflation!”

Sitharaman further explained: “This inflation is happening particularly because of certain global factors such as metals being very highly priced, energy -- at least fossil fuel -- being very expensive, production being cut down, and the cartelisation of those who are fixing the prices.”

All of these, she said, has a bearing on all economies across the world, including that of India.

Globally, prices of essential goods are increasing, especially those that are important for industry, she said, adding that within India, essential goods such as pulses and edible oils are still dependent on imports. “Our capacities have still not grown in oilseed production; neither are we producing enough pulses for the country’s consumption needs. At present, we have to import these, but the Government of India has been giving incentives to encourage oilseed production.”

The FM added: “We have also realised that we are at a stage where we are making a transition towards climate-friendly steps, moving out of fossil fuel. At this time, like many other countries, we probably even want to look at natural gas coming in to replace many of what has been dependent on fossil fuel. However, due to the global natural gas price rise, we are facing a situation where we are planning for something at a transitional stage and that also is now going to be dearer.”

To make room for the volatility, the planning needs to get adjusted. At present, as a part of our green push, we are giving more incentives for electric vehicles and so on, she pointed out.