Finance Minister Nirmala Sitharaman said that there is no question of the Indian economy slipping into recession or witnessing stagflation, even though several countries across the globe are facing enhanced risks of either a sharp slowdown in growth or recession.
Sitharaman indicated the government is open to initiating more measures to rein in inflation, on top of the supply-side steps already announced. She highlighted that the pandemic and the Ukraine conflict disrupted the global supply chains, which have driven up inflation globally and caused a slowdown in growth. However, India is in a much better situation than most others.
According to the International Monetary Fund (IMF) India will likely grow at 7.4% in FY23, against 8.9% in the previous fiscal. The IMF has warned of a possible global recession in 2023. FM said that retail inflation remained around 7% but highlighted that it was much lower than what even some advanced economies are witnessing. On nine occasions, retail inflation was in double-digits. Retail inflation has exceeded the upper band of the RBI’s medium-term target of 2-6% for a sixth straight month in June. The government has in recent months cut the excise duty on fuel and also reduced the import duty on a number of products. It also raised the export duty on iron ore and select steel products to boost domestic supplies.
Finance Minister said while about 4,000 banks in China are reportedly on the verge of bankruptcy, in India, the gross bad loan ratio hit a six-year low of 5.9% in FY22. Even in the debt-to-GDP ratio, India’s position is better than many countries.