FM seeks global action for post-Covid recovery
BENGALURU/NEW DELHI: Finance minister Nirmala Sitharaman on Wednesday called for urgent coordinated global action to enable swift post-pandemic economic recovery across countries and to build resilience to future shocks.
Speaking at the G20 Emerging Market Economies meeting organized by the International Monetary Fund in Washington D.C., Sitharaman also said the International Solar Alliance can be an effective platform to move towards environmentally sustainable and financially viable alternative energy sources.
Sitharaman’s statement comes against the backdrop of a rise in global crude oil and commodity prices following the Russia-Ukraine war, which is causing a sharp spike in inflation across the globe, including in India, and is impacting economic recovery prospects.
The meeting was organized on the sidelines of the upcoming G20 Finance Ministers and Central Bank Governors Meeting and was also attended by the Reserve Bank of India governor Shaktikanta Das.
Sitharaman also shared her insights on the risks and nearterm policy challenges such as ensuring energy security faced by emerging market economies.
The IMF’s World Economic Outlook, released on Tuesday, slashed India’s GDP growth forecast to 8.2% from 9% estimated earlier citing the impact of high global oil prices on domestic demand and private investment.
It estimated India’s inflation to average 6.1% in 2022-23, which is higher than RBI’s upper tolerance band of 6%. India’s retail inflation climbed to a 17-month high of 6.95% in March and wholesale inflation accelerated to a four-month high of 14.55% in the same month, remaining in double digits for about a year.
IMF India mission chief Nada Choueiri told Mint on Wednesday that, besides crude, rising prices of edible oils and fertilizers would also impact India’s external position. India is also faced with lower external demand (particularly from Europe), heightened uncertainty, and lower investor confidence, said Choueiri. However, she added that India’s international forex reserves (covering about eight months of imports) were at a comfortable level and provide sufficient cushion to withstand external shocks in the near term.
“The finance minister, speaking on the need for environmentally sustainable and financially viable alternative energy sources, said that International Solar Alliance can be an effective platform to catalyse efforts in this direction,” the ministry of finance tweeted on Wednesday.
The minister’s reference to financial viability of energy sources comes in the context of the recent surge in prices of natural gas in world markets, which has affected Indian consumers too.
International oil prices have been highly volatile over the last two months, with Brent crude touching $107 per barrel on Wednesday compared with near $100 per barrel in the beginning of April, and a 14-year high of $139.13 per barrel in March.