Nirmala Sitharaman says Afghan crisis may impact economy; claims inflation has come down

Finance minister Nirmala Sitharaman explains the risks that a recovered Indian economy could face ahead and says the Centre will not undermine farmers by bringing imports but the government will manage prices.

In an exclusive interview to political editor Marya Shakil of CNN-News18, she also addresses the Infosys controversy by saying that the “anti-national statement” made by RSS-backed magazine Panchajanya was not right at all.

Here are some excerpts from the interview:

Many economic indicators show that perhaps the Indian economy is out of the woods. What are the risks to this recovery in your view?

Within the country, the risk is that we have to keep going with the vaccination against COVID-19 . If protection from coronavirus is given to people through vaccination, I think that will eliminate many related risks. Therefore, I am glad that the government’s vaccination effort is going well. Even as we talk, I think we will be touching 75 crore, at least one dose that is, and hopefully, the number for the second dose will also increase. So, with this, I am confident that if there is a third wave, God forbid, we will be able to face it. Not just the vaccine, we have ramped up the capacity of oxygen, ICUs, hospital beds. As the PM (Prime Minister Narendra Modi) always says “sabka saath, sabka vikas and sabka vishwas”, but now he clearly says sabka prayas. coronavirus is not something only the government has to fight, it is our duty towards our neighbour, friend and the country. The second challenge, which is extraneous, is the developments in Afghanistan. I would think because it’s in our neighbourhood, even that is something we will have to be extremely watchful about. Does it have a bearing on the economy? We don’t want it to have a bearing on the economy but, of course, we will have to keep an eye.

How worried are you about the inflation rate remaining high?

No, it has come down. We are doing everything to have goods brought in. Essential goods are being imported if necessary, foreign exchange reserves are also comfortable, so greater imports can also be allowed without making a harmful impact on our farmers because we are conscious that their produce gets the due price; we don’t want to undercut them, undermine them by bringing imports. But we will be managing the prices.

Your budget for 2021-22 was framed in a different context. Since then, we have had a debilitating second wave of COVID-19 that would have upset calculations. What will be the extent of the slippage on the budget numbers?

Strictly speaking, we have given the emphasis on expenditure and, that too for infrastructure expenditure, especially health infrastructure. The PM is closely monitoring every department with regard to quarterly targets. The second wave hit our first quarter, so in the second quarter we have tried pushing but some residual delay in expenditure is noted; hopefully, in the third and fourth quarter we will clear it. So, if anything, I should be worried if they are not spending on infrastructure but I think most departments are conscious that they should go ahead with it.

Are there particular heads you are concerned about?

Well, if it’s infrastructure it has to pan across so many departments and health obviously ramping up infrastructure is going to be a challenge. But I am sure it’s moving because we aren’t just looking at the government but also looking at private sector expenditure.

Lot of budget decisions are still pending, like development financial institution (DFI) to fund infrastructure projects, privatisation of public sector banks (PSB). When can we expect these to be taken forward?

DFI is moving forward and I am sure we will be able to come up with something soon.

Disinvestment and privatisation appear to be particular casualties?

I don’t think so; I am confident we will be moving with disinvestment targets also.

Does the sale of Air India seem to be of particular concern?

No, it’s on and keeping with the schedule.

Air India has a debt of Rs 43,000 crore as of March. How much will the government have to absorb?

We will see how it goes because you will know when the tender documents are opened and what offer we have given everybody.

How do you view the entire controversy around what Panchajanya, the RSS-associated magazine, said in the context of Infosys being anti-national? You have been personally involved in resolving the issues.

The government and Infosys are working together and I have called them twice and drawn the attention of Nandan Nilekani (Infosys co-founder and non-executive chairperson). They are working with us, they are being helped by the Institute of Chartered Accountant Association of India, they have also got some tax experts working with them and I am hopeful that Infosys will give us the product. Yes, it has been delayed, it has hurt us, we have brought in a portal with a lot of expectations. It had glitches, all that has been taken on board and I think we should work together to get it done. I am confident that Infosys will work it out.

Would you say that the statement calling them anti-national and that they are trying to destabilise the Indian economy was right?

That wasn’t right. I think they have also made a statement distancing themselves from whoever wrote it. I think that’s not called for and rightly people have withdrawn from it. It wasn’t right at all.