FM says global conflicts fuel inflation; calls for normalcy

Finance Minister Nirmala Sitharaman today said global wars and skirmishes are leading to inflation due to the impact on supply chains and food value chain disruption. Listing out decadal priorities at CII’s Global Economic Policy Forum in New Delhi today, Sitharaman stressed restoring normalcy in the global geopolitics, avoiding concentration risk in global supply chains, climate change, and global food security and quality life for those engaged in agriculture.

“The attempt of the industry and the government everywhere should be to restore global calm. Restore some normalcy. Nowhere can there be enough justifiable reasons for skirmishes or war. The global priority for this decade must be to restore normalcy and talk out the issues. War should be avoided, disruption should be avoided. They are the main cause of supply chain disruptions and disruption of food value chains. If you look at it, inflation globally is a big challenge,” Sitharaman said.

“But inflation, as you know, does not respect borders. Inflation is so contagious. No country’s effort today is completely successful because beyond its powers the inflation forces come in. Therefore the primary cause I would think is the disruption, the war. And, as a result, the world is facing a challenge which in many ways is reflected in our economy. So I would think it is incumbent upon all of us -- industry, government, policymakers and citizens’ forum, to try tirelessly to have some normalcy,” Sitharaman adds.

Sitharaman also advocated the need to look beyond concentrated supply chains. “The second is the oft-discussed problem -- the supply chain and supply chain disruption. The world tasted success in spreading supply chains on the principles of efficiency rules and scale rules. So we located the production hubs at a place where it was economically making sense,” she said.

“But today, would anyone disagree that just the economics do not prevail? Politics and strategy matter. Today, the concentration risks are playing out in so many different ways. We all will have to look at blending economies with politics and strategies,” Sitharaman said.

“Supply chain lessons that we have learnt in the last few years and the last decade tell us that we need to realign ourselves. The industry needs to realign itself, not just on the basis of economic principles,” she added.