Avoid unidimensional view of subsidies: Sitharaman to World Bank
Finance minister said that India’s supportive policies have helped the country move towards meeting the sustainable development goals.
India has told the World Bank that it must avoid a “unidimensional” view of subsidies, asked it to distinguish between “distortive subsidies” and “targeted support” to vulnerable households, and said that India’s supportive policies have helped the country move towards meeting the sustainable development goals.
Speaking at the development committee meeting of the bank on Friday, finance minister Nirmala Sitharaman said that India agreed that making public expenditure efficient must be a priority for all countries and acknowledged the bank’s appreciation of India’s digitalisation efforts.
She then said: “On subsidies, we would like Bank not to take a unidimensional view of agricultural, fisheries and fossil fuel subsidies. It is important to differentiate between subsidies that are distortive and wasteful and those that are targeted to support the low-income households.”
Giving the example of the Ujjwala Yojana, Sitharaman highlighted how the distribution of cooking gas cylinders had enabled access to clean cooking methods and has helped achieve near saturation access to clean cooking fuel for women in India. “This has made a definitive contribution in improving India’s performance on SDGs 3, 5 and 7.”
SDG 3 is about ensuring healthy lives and promoting well being; SDG 5 is about achieving gender equality and empowering women; and SDG 7 aims at ensuring affordable, reliable, sustainable and modern energy for all.
While expressing confidence about India’s growth trajectory, and outlining the country’s achievements in the digital realm, Sitharaman said that New Delhi remains concerned about the global geopolitical and economic climate and flagged risks associated with it for the world at large.
“The geopolitical environment remains tense and uncertain. This could trigger fresh supply concerns in the winter for critical commodities such as crude oil and natural gas,” she said. “Inflation control would be a major concern in the developed economies. A reality check on the part of stock markets in the developed world could bring back growth chills everywhere.”
But despite this, Sitharaman said the outlook for the Indian economy’s growth remained optimistic “on the back of strong macroeconomic fundamentals and structural reforms and initiatives undertaken by the government”.
Later, at a plenary meeting of the international monetary and finance committee of the International Monetary Fund, the finance minister once again flagged risks.
Sitharaman “shared concerns on key downside risks to the economy owing to slowdown in growth in major economies, cross-border effects due to the ongoing geopolitical situation, rise in commodity prices and tighter financial conditions”, according to a finance ministry tweet.
However, Sitharaman reiterated that despite global headwinds, the Indian economy “will stay on course and is projected to grow at 7% in FY 2022-23”.
India has, since the onset of what the world refers to as Russia’s invasion of Ukraine and India calls the conflict in Ukraine, highlighted its consequences in terms of food, fertiliser and energy prices.
While praising IMF for its recent initiative to create a new food shock window to help countries address food insecurity, the finance minister spoke of India’s scheme that had ensured availability of free food grains to more than 800 million poor and vulnerable families through the country’s public distribution network.
On climate, Sitharaman, at both the bank and IMF events, reiterated India’s traditional stance in favour of principle of equity and common but differentiated responsibilities, briefed the international community on India’s updated nationally determined contributions, and pointed to the significance of tech transfer and climate finance that the developed world owes to the developing world.
She also kept up with her bilateral engagements on the sidelines of the IMF and the World Bank’s annual meetings, with a focus on G20 and India’s imminent presidency of the grouping.
She met Paolo Gentiloni, economy commissioner of the European Commission, and they discussed deepening collaboration between India and the European Union during India’s presidency. “Both sides discussed the need to further strengthen Multilateral Development Banks #MDBs to enable them to help countries in need. They also agreed that #G20 had a major achievement on #InternationalTaxation and the momentum on this must be maintained,” according to the finance ministry.
Sitharaman also met with Gita Gopinath, IMF’s first deputy managing director and former chief economist. The ministry said they discussed “current global matters, including food and energy security issues, global debt vulnerabilities, climate matters, #DigitalAssets and upcoming #G20 India Presidency”.