Food should not become an instrument in war and disruption, amid increasing fragmentation caused by war and re-globalisation that has impacted supply chains and food security, Finance Minister Nirmala Sitharaman said on Friday. She also said that India is looking at ways to bring down its overall debt so that it does not burden future generations.

“Our efforts to bring down debt are streamlined to meet India’s aspiration requirements, but with a sense of responsibility so that our coming generations don’t feel the burden. We need to be sure that money spent has its right returns,” the Finance Minister said. India’s external debt to gross domestic product (GDP) ratio declined to 18.6 per cent at the end of June 2023 from 18.8 per cent at the end of March 2023, according to Reserve Bank of India data.

 

Speaking at the Kautilya Economic Summit 2023, the Finance Minister said that countries all over the world need to think about where to source their food from and consider having a regional balance at least for staple and essential products.

“If you depend on global sourcing, you will also have to factor in the global risks, and can any one country or any one region afford to have food at that risk level?” Sitharaman said.

Addressing a gathering of eminent economists, the Finance Minister also said that multilateral institutions, including not just the International Monetary Fund (IMF) or World Bank but others such as the World Health Organisation, are less effective today than when they started. She said that the level of effectiveness of their intervention that they were to bring into the global scenario is at less than an ideal position today.

“Because they have become less effective, what we took for granted is no longer to be taken for granted,” Sitharaman said.

The Minister highlighted the report by the G20 independent expert group on multilateral development bank (MDB) reforms for providing a document that can be used and discussed. “…Everyone has agreed that indeed these institutions will have to be reformed.”

Talking about the impact of terrorism, which she referred to as the elephant in the room, the Finance Minister said that the risk that businesses would have to factor into decision-making is very strongly going to be influenced by the impact of global terror. “Businesses can no longer be attracted by just policies or by just an open economy. They are also going to factor in the magnet that is going to attract terrorists.”

Sitharaman said that the strategic blocs from the Cold War days are reshaping themselves, and there is a certain pessimism that globalisation is at its end. “Re-globalisation is happening…Certainly, it has an impact on the economy because the supply chains get influenced.”

She said that there were three wars going on simultaneously, and it was the duty of the world to decide the path that the global economic order will have to ready itself for. “We are meeting today at a time when not one churn but several churns are simultaneously happening…Challenges are having a spillover effect across the globe.”

On fiscal management and responsibility, the Finance Minister also said that the government is actively looking at the data related to the debt of some emerging market countries and how they are managing them.

The Finance Minister also said that there was a global consensus on putting in place a system for cryptocurrency regulation. “Cryptocurrency is not something where any one country can succeed…The G20 is now coming out with a template for the crypto world.”