Checked inflation even when Covid hit us, says FM Nirmala Sitharaman

CPI inflation at 6.2% now, was 9.1% during 2008 financial crisis, she says

The Narendra Modi government has been able to control retail inflation in spite of the global economic slowdown brought in by Covid-19, finance minister Nirmala Sitharaman said on Friday.

She was defending the Budget in the Rajya Sabha, and said that the announcements will stabilise the economy, which was reeling from the pandemic. And, they are set to create jobs and boost consumption with focus on capital expenditure.

A day after the government banned the import of foreign-made drones, the finance minister also doubled down on her ‘Drone Shakti’ proposals. She said that drone technology will be used to modernise agriculture.

Sitharaman was replying to the debate on the Budget in the Upper House. Rejecting criticism of high prices in the country, she said the average CPI inflation in 2020-21 was 6.2 per cent when the pandemic shaved off Rs 9.57 trillion from the economy. During the 2008 financial crisis, the economy’s size reduced by Rs 2.12 trillion and yet average inflation was 9.1 per cent.

“The Budget aims at continuity, the continuity is in giving the stimulus through public expenditure. We also wanted to underline the stability and sustainable recovery that we so need now,” she said.

“At a time when the economy has to grow and grow at a good pace, it is important for the economy also to be stabilised. Public expenditure in building infrastructure — as part of the massive Rs 7.5-trillion capital spending plan outlined in the Budget — will provide stable and sustainable recovery,” she said.

The Rs 7.5-trillion capex outlay target for FY23 includes Rs 1 trillion in long-term loans to states for their capex needs.

“Bringing in drones as an instrument or a very effective tool for improving and modernising India’s agriculture. When you bring in a drone, it has got several adaptations,” Sitharaman said.

The Drone Shakti project will implement a drones-as-a-service (DRaaS) model, and will seek to encourage local manufacturers and drone services.
 

The government is also proposing a public-private partnership (PPP) for the use of ‘Kisan Drones’ that will be used to help farmers.

To help promote local industry for drones, the government banned the import of foreign drones into the country. Only exceptions will be made for import for research, defence and security purposes. Citing economist Ruchir Sharma, Sitharaman said that advanced economies that relied on large stimulus and demand-side measures to stimulate the economy during the pandemic are now facing high inflation.

Taking a swipe at the Congress, she said while the party was responsible for rural employment guarantee scheme MGNREGA, it was also responsible for the manner in which it has been misused.

“Take the entire credit for the misuse of MGNREGA. We use the scheme transparently and properly. MGNREGA was because of them, but it’s misuse was also due to them. CAG was also talking about the misuse and MGNREGA was infested with ghost accounts. People, who did not exist, were receiving money,” she said.

She refuted the claim that the allocation made for the ministry of housing and urban affairs is purely for the Central Vista.

Sitharaman said the amount has been increased from Rs 54,581 crore in 2021-22 to Rs 76,549 crore in 2022-23 due to higher allocation for the PM Awas Yojna Urban.