Union finance minister Nirmala Sitharaman on Tuesday said the G20 has immense potential to work towards the “global good”, adding that the need to strengthen existing multilateral institutions affirmed India’s commitment to third-generation reforms that are being implemented.
Sitharaman, in the United States to attend the annual meetings of the International Monetary Fund and World Bank, touched upon the challenges faced by global communities due to external factors and said that many such issues will come up at the G20, the premier forum for international economic cooperation, during India’s presidency.
“You need new institutions, please do… From the lessons learned from how these [existing institutions] have become less effective, we need to make them more effective as well,” she said during a conversation with economist Eswar Prasad on ‘India’s Economic Prospects and Role in the World Economy’, organised by The Brookings Institution as part of its State of the Global Economy and Global Governance event.
India will hold the G20 presidency from December 1, 2022 to November 30, 2023 at a time when the Covid-battered global economy faces acute headwinds due to the Russia-Ukraine conflict that has disrupted supply chains, making food and fuel unaffordable to many countries.
Multilateral institutions “need to be robust and strengthened in order to give solutions” to the global problems, she said, adding that these institutions should become “voices of emerging markets” for the global good.
India joined ‘the G20 Troika’ of Indonesia and Italy on December 1, 2021, representing the current, the previous and the incoming presidencies in that order. The members of the G20 include Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Republic of Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the United Kingdom, the United States, and the European Union. Spain has also been invited as a permanent guest.
India converted the Covid-19 pandemic into an opportunity to make the country self-reliant on several spheres, Sitharaman said.
“The pandemic was an opportunity to continue with reforms with a greater momentum, whether it is making agriculture sustainable, whether it is making sure that we are able to spend a lot more money on infrastructure,” she said.
During the pandemic, the Indian government raised capital investments significantly to boost the economy and launched ₹111-lakh crore National Infrastructure Pipeline (NIP) to create assets and provide jobs.
As an emergency measure to protect the poor and vulnerable from hunger during the pandemic, India launched a massive free-dry ration scheme for 800 million people. One of the world’s largest food security programme – the Prime Minister Garib Kalyan Ann Yojana (PMGKAY) – has been continuing since April 1, 2020 with an expenditure of over ₹3.91 lakh crore. Besides free food, people were also given interest subvention to meet their input costs, she informed.
The finance minister said the idea was to hand-hold throughout and not just leave them to fend themselves after giving some money, which would have been an easy task. “The moment you give the money, you can always check the box and say ‘I’ve done it’…money is gone there, but that’s not the way in which we want to deal. We are going layer by layer…top to bottom and making sure…[that] everybody gets covered,” she said.
Sitharaman said the Modi government is also focused on bridging the regional divide, with the Northeast, which was largely ignored during previous regimes, being aligned with the mainstream. “Northeast, I think, I will dare say this … the prominence that Northeast has been given by the current government between 2014 and now is one of the most exhaustive,” she said.
She also highlighted disruptions in global food and fuel supplies and their rising costs impacting fertiliser prices, one of the key inputs for millions of Indian farmers. “There are things happening outside, which are definitely hitting us…,” she said.
“Fertiliser…is at a great risk. Last year, we had to give 10x [ten times more] the price on [its] imports, and obviously Indian farmers are still not really large farmers [who can afford it],” she said.
India provides subsidised fertiliser to its farmers and absorbs the entire price-shock, which is expected to be more than ₹2.50 lakh crore in FY23, a significant jump from the budgeted amount of ₹1.05 lakh crore for 2022-23.
Referring to millions of Indian farmers [mostly having handkerchief-size landholdings] solely dependent on agriculture for subsistence, Sitharaman said they need fertilisers at affordable prices. “I can’t raise the input cost by saying ‘I’m importing it at this price’. Therefore, it is [for you] to take the burden as well. So, we have taken burden of the entire price. The farmer pays what he had paid in 2018-19…even today he pays that price in spite of the international prices going up,” she said.
The government is committed to safeguard interests of its farmers and also give push to the Indian economy through its reform agenda, which the nation is pursuing relentlessly, Sitharaman said.
“We are making sure credits are available at an affordable rate, where it is necessary to give an intervention in the form of Interest subvention. We do that so that small and medium businesses can survive, farmers can get it at an absolutely affordable rate,” she added.