Job creation, wealth distribution priority over inflation: FM Sitharaman

While inflation is a priority for the government, it is not as ‘red-letter’ as creating jobs and ensuring equitable distribution of wealth, Finance Minister Nirmala Sitharaman said on Thursday.

“I don’t have the luxury of sequencing priorities. Several things happen simultaneously. The red-lettered ones would definitely be jobs, equitable wealth distribution, and growth. In that sense, inflation is not red-lettered. We have shown that in the past couple of months, we managed to get it to manageable levels,” she said at an event organised by the US-India Business Council (USIBC).

The finance minister said if India and the United States joined efforts in growing their respective economies, they might be the engines of global growth within the next two decades.

“If India and the US were to work together, within the next 20 years, we shall reach a combined 30 per cent of the size of the global economy. We shall be contributing to the global GDP, to the extent of 30 per cent. That itself will make India and the US the engine of global growth,” Sitharaman said.

The finance minister’s comments come amidst reports that since the December quarter of last year, India has overtaken US’ historical partner United Kingdom as the world’s fifth largest economy.

A drop in commodity prices due to fears of recession in advanced economies has helped ease the inflationary situation in India, though the global scenario is still uncertain as Russia’s invasion of Ukraine enters its eighth month and Russian President Vladimir Putin threatens to further cut energy supplies to Europe.

India’s Consumer Price Index-based inflation for July came in at its lowest in five months, helped by an easing of global commodity prices and lower food prices domestically, but was still above the Monetary Policy Committee’s medium-term target, thus justifying the recent monetary tightening by the Reserve Bank of India.

The finance minister said India would continue ramping up its engagement with global investors and businesses, to strengthen the foundation of investment for the next 25 years.

“Mutual understanding, particularly at a time when the world is so divided, will further strengthen shared values between India and the US. These shared values do not just stop with democracy. They also help in freeing economies, which are otherwise throttled,” she said.

“The size and diversity of the Indian economy offers a great lot of opportunity. India’s demographic strength is that it is skilled, high-end, technically savvy, providing solutions to the world. The same demography has purchasing power, and is very aspirational. This market is a captive market for any investor,” Sitharaman said.

The minister cited an example of the technology sector, saying India’s digital revolution offered investment opportunities for American companies. She touched upon the potential of India’s bourgeoning start-up ecosystem and said the Narendra Modi administration had encouraged constant engagement with investors to understand and address their concerns.

“I am open to receive suggestions, understand pain points, and offer necessary redressal wherever possible,” she said.

On India’s upcoming presidency of G-20, Sitharaman said it came at a very challenging time for the grouping and the global economy.

“It is also very heart-warming that the G-20 chairs are Indonesia, India, and South Africa one after the other, all emerging markets. This shows G-20’s focus on the full potential of the emerging markets to lead the global economy,” she said.