Business / Rising fuel prices a 'challenge' to India's recovering economy: Sitharaman

Zoom News : Oct 18, 2021, 06:28 PM
New Delhi: India is in no hurry to withdraw the pandemic-era stimulus and is ready to do more if required to support the nation’s economic recovery, the country’s finance minister said.

“They will continue,” Finance Minister Nirmala Sitharaman said in an interview in New York, Sunday, referring to fiscal measures to counter the impact of the Covid-19 outrbreak. “The emphasis on building health infrastructure will continue,” and so will government spending on capital expenditure and infrastructure, she said.

Sitharaman, who is due to present India’s annual budget on Feb. 1, echoed Reserve Bank of India Governor Shaktikanta Das’s sentiment on the need to keep policy easy as the economy makes its way out of the pandemic. The RBI, as well as the International Monetary Fund, estimate the nation’s gross domestic product to grow 9.5% in the year to March -- the quickest pace among major economies -- after contracting 7.3% last year.

That is faster than Bloomberg Economics’ projection for a 7.8% expansion.

Challenges to the recovery remain in the form of higher global commodity prices, which could fan inflation and upset the government’s spending plan in a nation, which is the world’s third-largest oil importer.

“The challenge I will face, and the teams are also watching in the ministry, is the way the fuel prices are leading to a big crest,” Sitharaman said. “This uncertainty is a big element for me,” she said.

For now, Asia’s third-largest economy is on track to divest stakes in state-run entities, as well as measures to boost foreign debt inflows for capital to fund investments.

“We are pushing to have it done,” Sitharaman said, when asked if the listing of government-owned Life Insurance Corp. of India will happen this year. Separately, she said the inclusion of the nation’s bonds into global indexes depends on India fulfilling certain processes, and the government is moving in that direction.