Union Finance Minister Nirmala Sitharaman today said there was zero possibility of India slipping into stagflation (the portmanteau of "stagnation" and "inflation") or recession in the light of the fact that the country continues to be the fastest growing economy in the world. Replying to the debate on the issue of price rise in Lok Sabha amid a walkout by MPs of the Indian National Congress (INC), Sitharaman said: "Replying to Adhir Ranjan Chowdhury’s query, I would like to say there is no question of India getting into stagflation or what it is called in the USA 'technical recession'. There is absolutely zero probability of India slipping into recession.”
The finance minister said that prices of edible had been corrected sharply following the steps taken by the Narendra Modi government.
What is the basis of Nirmala Sitharaman's optimism?
Nirmala Sitharaman said that despite the blow of the Covid pandemic on the economy, "we have maintained inflation rate at 7% or below", adding that the Indian economy had recovered admirably. "Pandemic, second wave, Omicron, Russia-Ukraine (war), even today largest supply components in China are under lockdown…in spite of that, we have held inflation well within 7% or below. That has to be recognised," the finance minister said.
Who wanted to debate price rise?
As the Lok Sabha took up the discussion on price rise today, a number of opposition leaders like INC's Manish Tewari, Trinamool Congress’s Kakoli Ghosh Dastidar and DMK’s Kanimozhi criticised the government for the rise in prices of fuels and food items as well as GST implementation.
It was Shiv Sena MP Vinayak Raut and INC MP Manish Tewari who had given the notice for a discussion on the issue in the lower house (Lok Sabha). NCP MP Fauzia Khan gave the notice in the upper house (Rajya Sabha).
Why the finance minister does not take the opposition's issue seriously
Nirmala Sitharaman said that nearly 30 opposition MPs had spoken on the issue of price rise in the house, out of which "most raised political angles rather than data-driven concerns". "So, I too will try to reply a little politically," Sitharaman said.
On the issue of GST implementation, Sitharaman said in the Lok Sabha that GST on food items such as flour, rice, milk, and lassi, among others, was a misconception. She asserted that the union government had not imposed GST on any loose items to ensure that the poor do not face problems. "The GST is only on packaged food," she said, reiterating the clarification her ministry and she had issued a day after there was a nationwide furore over the alleged GST imposition, ignoring the fact that these items were not tax-free even before GST came into force under the late Arun Jaitley, the finance minister under Modi 1.0, in mid-2017.
"There is no GST on ICU, emergency services, and room rent below 5,000," the finance minister said. She clarified that there was no GST on funerals, crematoriums and mortuary services either.
"Gross NPAs of banks at a six-year low of 5.9%; India's debt to GDP ratio at 56.21% in FY22, much lower than many nations," Sitharaman highlighted.
'India doing better than the world'
The finance minister said that India remained the fastest growing economy in the world in the assessments by global agencies. "I fully credit the people of India… even against adversity, we are able to stand up and be recognised as the fastest growing economy," the finance minister said.
Sitharaman said the world had never seen such a pandemic. "We’ve never seen a pandemic of this kind… all of us were trying to make sure that people in our constituencies are given extra help. I recognise that everybody — MPs and state governments — has played a role. Otherwise, India wouldn’t be where it is compared to the rest of the world," she said.
"We have never seen a pandemic of this kind… all of us were trying to make sure that people in our constituencies are given extra help. I recognise that everybody -MPs & State Govts- has played their role. Otherwise, India wouldn't be where it is compared to the rest of the world. So, I fully credit the people of India for this…even against adversity we are able to stand up and be recognised as the fastest growing economy," the finance minister said.
Unsatisfied with the finance minister's reply, Tiwari said that the union government was trying to paint a "hunky dory" picture of the economy, which was unreal. The INC MP said, "Finance Minister's reply was disappointing. The attitude of the government is 'there is no inflation in the country, people are not suffering'. Everything is hunky dory. If that's your response to concerns of opposition articulating the voice of 140 crore people of the country, why listen?"
The INC MPs subsequently staged a walkout from the parliament.