Finance minister Nirmala Sitharaman, during her address at the conference on 'Taming inflation in India' by Indian Council for Research on International Economic Relations (ICRIER) today, said that even in this interconnected world, the Indian economy has managed inflation well, which is not merely a monetary exercise. She says the RBI will have to synchronise more with the Centre – but not as much as other western developed countries – to handle inflation as it is an exercise where the fiscal policy, together with the monetary policy, has to work.
"If the global disruptions because of supply chain and other things are bothering every economy today, including us, purely what is within India is the monsoon, which has always kept us on our toes about supply chains," says the FM.
She says India's experience in handling inflation depends so much on so many factors, the central bank, its instruments, its interest rate management, etc. “I would say India's inflation management…is an exercise of so many different activities and the majority of which is outside of the monetary policy given in today's circumstances," says the minister.
She said at a time when global prices went up, the Centre wanted to make sure that burden is not passed on to the end consumer. “Wherever it was possible, the government twice reduced the price of petroleum products.”
She says that recently, widely available information in the public domain shows how inflation has varied from state to state. “There could be several reasons for it, but the fact remains, con-incidentally, inflation is higher than the national level, in states which have not reduced fuel prices. It established fact that the movement of food grains and food-related items actually have a bearing on the price of such items.”
She also praised PM Modi for “his courage” to get crude oil from Russia at a discount. She added that at the same time, the PM made sure India’s friendship with all countries remained intact. “Our entire import had 2% of Russian component, it was ramped up to 12-13%,” says the FM, adding that countries were finding their own ways against sanctions imposed by the West over the import of Russian oil.
During the U.S.-India Business Council (USIBC) summit on Wednesday, she touched upon India's need to continue to use coal energy despite global environmental concerns, primarily due to the country's sheer size and different levels of development. She said the current geo-political crisis has added to the concerns around the handling of climate change issues, and because of the Russia-Ukraine war, there are huge uncertainties around crude, natural gas and coal. "We are saying we need to fall back on coal for some more time." She said it is for both the U.S. and India to come up with solutions to these concerns, even in the energy-transition period.