Inflation control, investments key to sustainable growth globally: FM
Finance Minister Nirmala Sitharaman today underlined a five-pronged strategy for sustained global economic growth, with inflation control and investments led by the governments being the top measures. She outlined investment in health and education, climate finance, and diversification of the supply chains as the other measures needed for a sustainable global economic recovery.
Addressing the B20 – one of the G20 forums in New Delhi today, Sitharaman said, “Elevated interest rates for a long time can come in the path of economic recovery.”
Urging the central banks across the world to also look at growth related priorities, Sitharaman said, "The tendency to use interest rates as the only solution for dealing with inflation has its own downsides. Most economies have this problem due to obsession with using the monetary tool and not manage the supply side factors. This will only give a temporary solution. Task before the Central banks in today’s context is to keep in mind growth and related priorities while controlling inflation. Fiscal deficit needs to be restrained otherwise inflation will not be wholesomely defeated or brought under control."
"The second priority is to increase the emphasis on investments to spur growth. Public sector will have to take a lead unless the private sector also steps in. That is the story which is happening in India. Government of India is unrelentingly focussing on capital expenditure," Sitharaman said adding that the countries will have to tide over the post pandemic constraints to ensure capital expenditure for sustainable economic growth.
FM said the third priority for growth is investment in health and public infrastructure. "The fourth one which is key to sustaining growth is climate change finance. Some countries like India have funded its commitment given in Paris and fulfilled their nationally determined commitments with their own resources. The fifth point which I think is very important for global economic recovery is diversification of the supply chains,” She added.