India’s inflation at a manageable level of 7.4%, says finance minister

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A man buys vegetables from a vendor at a market on the outskirts of Kolkata, India. Reuters

Finance Minister Nirmala Sitharaman has reiterated that the inflation rate, which is hovering over 7 per cent in India, is “at a manageable level” compared to where some other countries are at present. But anticipating critics, she added that the government is working to bring it down under 6 per cent and would like to bring it down under 6 per cent and “ideally” to 4 per cent.

Sitharaman also noted with some satisfaction that the fundamentals of the Indian economy were in a good position at this time — “I’m not asking for celebration, but it is true that we are holding together”.

Addressing a news conference at the end of her visit for the annual meetings of the World Bank group, which were accompanied by 24 bilateral meetings, the finance minister also gave a broad overview of India’s priorities for its upcoming year-long rotational presidency of the G-20 group of countries — essentially, focusing on bilateral development banks, climate finance and cryptocurrency.

Sitharaman first spoke of the inflation being at a “manageable level” earlier this month. She spoke more expansively at the news briefing. Expressing satisfaction with fundamentals of the economy — “we are in a comfortable position”, she said, “that is why I keep repeating saying inflation is also at a manageable level.”

Inflation touched 7.4 per cent in September, which is outside the Reserve Bank of India’s (RBI) tolerable range with 6 per cent as the maximum.

“I love to bring it down further below 6 and we are making efforts for it,” she said and pointed to the situation in other countries, specially Turkey, where the annual inflation rate stood at 80 per cent in August.

“Countries are being very severely impacted through external factors,” Sitharaman said, pointing possibly to rising energy prices that have fuelled inflation around the world. “We are also being impacted. But because of the various measures we have been taking every time, timely each time. we’re able to bring it to this level, at least hold it.A ideally at this time to bring it four,” she said.

The finance minister also addressed the challenges India expects to face during its G-20 and pointed to the failure of the group to come out with a joint communique at the end of its finance ministers here during the World Bank meetings — they “couldn’t come up with a communique; all of them have ended up coming up with some stair chair statement.” She added that 2022 was a contentious year for the group and that India will be taking on those and other challenges working closely with the members.

The minister also defended the Enforcement Directorate and the Income Tax departments’ action against civil rights bodies and activities. “I don’t want to comment on individual cases or the approach but certainly, there are instances which are so standing out and if the agency goes there it is with some prima facie evidence in its hand and some of them have even been covered by the media yourselves — the quantum of money stored, precious jewellery, gold seized. So they have to act,” she said in response to a question.

As the rupee continues with its downward trend against the dollar, touching 82.32 on Friday, Finance Minister Nirmala Sitharaman has said that she sees the phenomenon as dollar strengthening and not the Indian currency sliding.

Addressing a press conference in Washington on Friday, Sitharaman said that rupee has withstood dollar’s rise and has performed better than those of many emerging market currencies.

“I won’t see this as rupee sliding but as dollar strengthening. It is a matter of fact that the rupee has withstood the rise of dollar. But it has performed better than many other emerging market currencies,” she said.

The Finance Minister added that RBI is working to prevent its slide and contain it’s volatility.

“I will just say that rupee will find its own level,” she said.

On rising inflation and soaring food prices, the Finance Minister said that the economic fundamentals “are good”.

Foreign exchange reserves are in a “comfortable position” and inflation is also “manageable” she said.

“Fundamentals are good. Foreign exchange is good though it has come down. It is in a comfortable position. Inflation too is manageable though we would love to bring it down… are making efforts to bring it down. However look at other nations’ inflation rates,” she said, but at the same time added that the Government is “conscious of fiscal deficit”.

Asked about rising trade deficit with China, Sitharaman said: “Trade deficit is actually growing across board and more importantly, imports are more than exports. However the imports are more of intermediary goods. So we are not anxious about rising imports as they are of goods which are of value added products for exports purposes”.

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