Inflation, slow growth hurting global economy but India is shining: FM

The global economy is struggling with the twin challenges of high inflation and slow growth, but India has emerged as the fastest-growing economy in the world, Union finance minister Nirmala Sitharaman says in Parliament today.

“Europe is struggling. The European Central Bank (ECB) has raised interest rates many times. Germany, which is the largest economy in Europe, also faces big challenges. China is seeing stagnation in wages & consumer demand. The US also got downgraded,” the finance minister says in the Lok Sabha.

In an attack on the Opposition and explaining the economic situation of the country before 2014 when the NDA was elected to power and post 2014, Sitharaman says in 2013, global financial institution Morgan Stanley had termed India as a 'Fragile Five’ economy. The same Morgan Stanley, she adds, has now upgraded India and gave a higher rating. “Within nine years, an economy termed as 'fragile' came out of it due to our govt's policies ad despite COVID, we're now the fastest-growing economy in the world.”

Talking about some of the initiatives taken by the Modi government since taking power, Sitharaman says public sector banks have earned record profits of over ₹1 lakh crore, while gross NPAs and net NPAs are at a decadal low. “Banks are handing over record dividend cheques to the government, and those funds are being used for 'Garib Kalyan'.”

She says the public sector lender State Bank of India (SBI) has become the 'most profitable' company in India as per the recent quarterly results. Notably, in Quarter 1 of FY 2023-24, SBI earned ₹18,537 crore as profit. “We've turned Public Sector Banks from being "Debt-laded nightmares" into "Pillars of Jan Kalyan". From having a 'Twin Balance Sheet Problem' during the UPA rule, we now have a 'Twin Balance Sheet Advantage',” claims the FM.

The minister says India’s capital expenditure in 2014, when the NDA came to power, was only ₹3.92 lakh crore, but it’s now at ₹10.9 lakh crore in 2023. “Forex reserves in 2014 stood at $313 billion. In June 2023, it reached $600 billion.”

The finance minister says the global financial institution International Monetary Fund (IMF) has recognised PM Modi’s ‘Garib Kalyan Anna Yojana’, saying that it stopped people from going into poverty. “We've replaced ‘Political Interference’ with ‘Professional Integrity & Independence’ in the banking sector. Due to the government's sustained efforts, we have seen a turnaround in the Banking sector, especially through the 4R approach (Recognition, Resolution, Re-capitalisation & Reforms),” she adds.

Sitharaman cited the example of IMF's working paper, issued in April 2022, which had described that "subsequently, the doubling of entitlements in 2020 (doubling meaning where the ration was already 5 kg, PM Modi gave another 5, totally free to 80 crore people) helped maintain extreme poverty at the low of 0.8% level. Without any food subsidies, extreme poverty in the pandemic year would've increased by 1.05% & Lower Middle-Income (LMI) poverty would've increased by 8%."