West Asia Conflict Likely To Affect Current Fiscal: FinMin
Ahead of the meeting of the monetary policy committee (MPC) on April 8, Sitharaman also indicated to offer some cushion to the war-hit sectors in country, saying that the Reserve Bank of India (RBI) has room to lower interest rates and extend targeted support to sectors facing stress, even as it navigates a challenging global environment
New Delhi: Union finance minister Nirmala Sitharaman on Monday said that the current year is likely to be more challenging due to the escalating conflict in West Asia, which has heightened regional security concerns. However, she said, India has fiscal space to support sectors impacted by the escalating West Asia crisis, while the central bank has room to cut interest rates to deal with global challenges.
Highlighting the geopolitical risks, the finance minister also said that the ongoing tensions in the Middle East have intensified into what she described as a “systemic tremor” with the potential to disrupt critical global energy supply chains. “The Middle East conflict evolved into systemic tremor threatening vital arteries of global energy,” she said, while addressing an event organised by National Institute of Public Finance and Policy (NIPFP) here.
Ahead of the meeting of the monetary policy committee (MPC) on April 8, Sitharaman also indicated to offer some cushion to the war-hit sectors in country, saying that the Reserve Bank of India (RBI) has room to lower interest rates and extend targeted support to sectors facing stress, even as it navigates a challenging global environment. “The RBI may cut interest rates and has room to offer targeted support to affected sectors,” the finance minister said,
On the broader context of the Indian economy, the finance minister said that public borrowing strategies would need to be “smart” in light of global headwinds. She also pointed out that India’s growth vision under Viksit Bharat must contend with both external uncertainties and domestic variables such as the monsoon.
She further said that the world economy is witnessing volatility, uncertainty, complexity, and ambiguity, and global public debt has surged. “Many nations in the world are facing the issue of limited fiscal space to deal with the challenges as they fail to maintain fiscal prudence. However, India stands out in debt management with an overall debt-to-GDP ratio at 81 percent, the lowest among major economies,” she said.
As the country had fiscal space, she said that India recently reduced the excise duty on petrol and diesel and exempted customs duty for key petrochemical products to save the common man from rising prices due to the West Asia crisis.
