India is nowhere near a recession or stagflation and the government is making all efforts to bring down retail inflation below 7 per cent, Finance Minister Nirmala Sitharaman said on Monday.
Replying to a debate on price rise in the Lok Sabha on the demand of opposition parties, Sitharaman said the government has taken several measures to make raw material prices cheaper and reduce inflation of food items.
“There is no question of India getting into recession or stagflation even though the US may have entered into an unofficial recession. Even as international agencies like the World Bank and the International Monetary Fund (IMF) have downgraded growth rates of economies, each time India has remained as the fastest-growing economy,” Sitharaman said.
“A Bloomberg survey also recently said there is zero probability of India slipping into a recession. Our people have gone through the pandemic, global value chains have hit us, but in spite of that, because of the various steps taken by the government and also by the Reserve Bank of India, we remain much better than most countries,” she added.
Sitharaman said while 4,000 Chinese banks are reportedly on the verge of bankruptcy, gross non-performing assets of Indian commercial banks have declined to a six-year low of 5.9 per cent for FY22. “While many major economies have triple-digit debt-to-GDP ratios, the central government’s debt-to-GDP ratio declined to 56.29 per cent of GDP in FY22 from the revised estimate of 59.9 per cent for the same year. According to the IMF, India’s general government (centre+states) debt stood at 86.9 per cent of GDP in FY22,” she said.
Holding that India’s economy is showing very positive signs and the economy’s fundamentals remain strong, Sitharaman said GST collection in July was the second-highest ever at Rs 1.49 trillion, remaining above Rs 1.4 trillion for the fifth consecutive month. “PMI manufacturing is at an eight-month high at 56.4 with strengthening of output and new orders, remaining above 50 (threshold for expansion) for the 13th consecutive month,” she added.
Comparing the economic situation during the 2013 taper tantrum when India was considered one of the fragile five economies, Sitharaman said the NDA government has kept inflation under control. “We are trying to bring down inflation below 7 per cent,” she added.
On GST compensation cess, Sitharaman said all compensation cess to states had been paid till May 2022. “Our budgetary provision of Rs 1.2 trillion for FY23, Rs 87,000 crore has already been paid to states while Rs 14,000 crore is being paid for back-to-back loans. GST compensation is pending only for June because we have not received certificates from the Accountant General of some states. We will clear it as soon as we receive those certificates,” she added.
On oil bonds issued during the Congress-led UPA government, Sitharaman said it was in principle wrong and a burden on future generations.