FM Nirmala Sitharaman says macroeconomic fundamentals are sound

India’s macroeconomic fundamentals remain sound, which is reflected in the robust investment flows into the country, Finance Minister Nirmala Sitharaman told Business Standard in an exclusive interview.

“Just before the second wave of the pandemic hit, the high frequency indicators were robust, be it domestic factory orders, goods, services, electricity consumption, foreign direct investment flows, foreign exchange reserves etc,” she said.

Responding to a question on the rapid rise in stock market indices and the Reserve Bank of India’s caution on a bubble, Sitharaman said, she doesn’t want  to jump to such a conclusion. “It’s a different story that if it’s a bubble we have to be prepared. But, I don't think it's a bubble,” she said. 

Even though the Union Budget 2021-22 was presented two months before the second Covid-19 wave battered the economy, Sitharaman said the Budget was ‘tailor-made’ for the pandemic and she would focus on execution and implementation of the Budget proposals before arriving at a conclusion on what further relief measures were required.

The finance ministry’s assessment of the impact of the second wave on the economy will take a bit longer considering the timings and uncertainties, she said, adding she will need more time to give a direct answer to any question on any immediate relief measures.

However, she did not rule out relief for stressed sectors. “My interaction with industry and with states are happening now. Why would I want to say anything more on further relief measures without getting full knowledge of the impact?” Sitharaman said.

She emphasised that the government remained committed to the Rs 1.75 trillion disinvestment target for the fiscal, despite disruption due to the second wave. “I will do everything that I've said in the Budget this year, which includes everything that was approved by the cabinet already and announced in Budget 2021-22, including Air India. Privatisation is on course," the finance minister said. 

Sitharaman did not rule out an additional allocation for vaccines beyond the Rs 35,000 crore this year. “…if need be, I'm willing to give more than what has been allocated in the Budget as we negotiate with more suppliers. But let the Rs 35,000 crore be spent first,” she said. 

The government may even review the vaccination distribution policy as more states express their inability to carry out the drive amid shortages and high cost of procurement compared to what the Centre can get.