Government watchful of inflation, it is 'extraneous' nowadays: Finance Minister

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Nirmala Sitharaman. Photo: PTI

New Delhi: Union Finance Minister Nirmala Sitharaman said on Wednesday that the government is keeping an eye on inflation which is extraneous due to fuel and fertiliser prices.

Replying to the debate on the Supplementary Demands for Grants in the Rajya Sabha, the minister hit out at the opposition over its allegations against the government and gave answers to points raised by various members.

She said the supplementary demands for grants will ensure that the poor and farmers are given enough support.

"We are keeping a good eye on inflation that is purely extraneous nowadays because of fuel and fertiliser prices," she said.

Referring to the points raised by former Finance Minister P Chidambaram, she said the government is confident of mobilising resources for the amount involved in the supplementary demands for grants.

Referring to the economic difficulties being faced by some countries in the wake of decisions taken during the COVID crisis, Sitharaman took a dig at Chidambaram and said "borrow and spend and even print money to reboot the economy was the suggestion by former Finance Minister and others during COVID".

"As we close 2022, we should look at the negative effect of use of this suggestion by other countries, which have gone into recession," the minister said.

"Because of the targeted approach in which the government decided to give relief during COVID and address concerns given as inputs from various stakeholders, it has kept India on safe course of revival and also not getting into recession.

"Many large developed economies are facing recession because I think the way in which they handled Covid as different from the way in which we handled it in India...Targeted approach has kept us on the safe course of helping revival but not getting into recession," she added.

Sitharaman said gross NPAs have come down to 6 year low of 5.9 per cent in March 2022.

"Corporate sector has been deleveraging its balance sheet as evident in decline of core debt of private non-financial sector which has decreased to 87.8 per cent of GDP in June 2022 from 97.4 per cent in March 2016".

Sitharaman said that private investment capex is happening in India because of favourable policies like PLI.

She hit back at Chidambaram for his remarks that government had given a "corporate bonanza".

"In 1994 under Congress, corporate tax was cut to 40 from 45 per cent. In 1997, it was reduced to 35 per cent by P Chidambaram. It was former FM again who reduced Corp tax rate to 30 per cent in 2005. Was it 'Bonanza' for corporates then? If not, how is it now?"

The minister said between 2004-14 when UPA was in power, so many opposition ruled states were deliberately put to difficulty that RJD member Manoj Jha's words about "trouble making" or "trouble engine" are actually true.

She said as per NCGTC, total guaranteed amount for loans to MSMEs is 3,58,894 crore, against which NPAs outstanding are Rs 13,964 crore, which is only 3.89 per cent of total amount guaranteed. MSME sector has been given due support which helped them during COVID, the minister said.

She said in 2013-14, food subsidy was Rs 92,000 crore only. "Whereas in BE 2022-23, we have provided for Rs 2,06,931.09 crore for food subsidy. And after this supplementary, the allocation would be more than Rs 2.80 lakh crore"

The minister said in November 2022, Centre released Rs 17000 crore as GST compensation for the period April-June 2022. "So, total amount of compensation released to the States and UTs is Rs 1,15,662 crore."

In May 2022, Centre released Rs 86,912 crore as provisional GST compensation to states for the period Feb-May 2022 despite the fact that there was only Rs 25,000 crore available in GST compensation fund and sent Rs 62,000 crore from its own resources.

"To help our states, Centre itself took a loan of Rs 1.10 lakh crore in 2020-21 and Rs 1.59 lakh crore and released it back-to-back to states to meet the fiscal gap created due to lesser GST collection."

Referring to another remark of Raghav Chadha, Sitharaman said he was a qualified accountant and should look into numbers before he speaks.

"He said inflation is high & in double digit. He should notice that WPI inflation is at 21-month low of 5.85 per cent. Wholesale food inflation is at 2.17 per cent."

She said the share of the central taxes used to be given out on the 20th of every month and just to help the states to have the money earlier, "we have advanced it to 10th of every month. Now, states receive the share of central taxes, 10 days in advance".

The minister said that for 2021-22, amount utilised in several cesses is more than collected.

"Road and infrastructure collected - Rs 1,95, 987 crore, amount utilised by states - Rs 2,51,738 crore; health and education cess collected Rs 52,732 crore, amount utilised - Rs 78,287 crore," she said.

"Today, the situation is that we have come up with the demand of grants which are essential for ensuring there is food security and there is also enough to be given for fertilizers which is also crucial for our farmers," the minister noted.

The Rajya Sabha returned the Supplementary Demands for Grants to the Lok Sabha, authorizing the payment of Rs 3.25 lakh crore from and out of the Consolidated Fund of India for the current financial year ending March 2023.

The Bills-Appropriation (No 5) Bill, 2022 and the Appropriation (No 4) Bill, 2022- which Lok Sabha earlier passed, were cleared in the Upper House with a voice vote followed by a detailed discussion held on Monday and Tuesday.

Sitharaman said there has been a concern expressed by many members that the supplementary demand is a very big amount.

"It is not unusual for governments to come up with supplementary demand for grants, sometimes once or sometimes two. The supplementary demand for grants allows the government to come up with additional demands and in this particular case, since it is post global situation what we have brought in now is a result of what couldn't been anticipated in January when we were preparing the Budget for the February presentation."

She referred to the Russia-Ukraine conflict that began in February this year and said it had impacted supply chains, particularly for food and energy.

"All of which had led to way in which countries had to put a greater push to growth and recovery. Today, the situation is that we have come up with the demand of grants which are essential for ensuring there is food security and there is also enough to be given for fertilizers which is so critical for our farmers. We have come with the supplementary demands ...all in the direction of ensuring that the Indian economy, particularly the poor and farmers and so on, are given enough support."


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