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Addressing the B20 India summit in the national capital, the FM also said that green shoots of private capital expenditure were visible and the Centre’s massive push on capital expenditure was crowding the private sector.
“As things stand, nobody has a clue. But everybody feels that, yes, the first quarter did go on well, so the numbers should be good,” said Sitharaman. The National Statistical Office (NSO) will release the first quarter GDP data on August 31. India is ex pected to grow at 6.5% in the current financial year.
The FM was speaking on the theme “key priorities for sustained global economic recovery” at the summit. She highlighted five key priorities, which are critical to bringing global economies to the path of sustained recovery. The five priorities include taming inflation, increasing public investment in physical assets to push growth, raising investment in education and health, tackling climate change and diversifying supply chains to secure growth.
“It’s basic economics. I’m not saying anything new. Equally, elevated interest rates for a considerable time can come in the way of economic recovery,” said the FM, adding that a tendency to use interest rates as the only solution for dea ling with inflation has its own downside.
“And most economies do have this problem, because I think, for want of a better word, an obsession with using interest rates as the only tool to deal with inflation and not managing supply-side factors will not give a complete solution for inflation. Temporarily it can give but sooner, the supply-side issues can creep their ugly head,” she said. The FM said the task before central banks was to keep in mind the primacy of growth while keeping inflation in check.
The FM said India has showcased an accelerated pace of economic reforms in the last nine years. “Reforms have been continuing and wide-ranging domains have been covered — whether it is fiscal, digital, or physical infrastructure…,” she added.
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