‘Our economy has strong fundamentals’
NEW DELHI: The Indian economy could navigate through serious global challenges such as Covid-19 and surging inflation due to the Ukraine war because of its strength thanks to policy measures undertaken before the pandemic hit in March 2020, finance minister Nirmala Sitharaman said on Wednesday.
She said the measures included banking reforms, corporate tax reduction, digitalisation, implementation of the goods and services tax (GST) and of the Insolvency and Bankruptcy Code (IBC). Many of these steps were taken after 2014 and before the pandemic.
Sitharaman, who was speaking at the Iconic Day Celebrations under the Azadi Ka Amrit Mahotsav, said the Centre took some of these “major steps” without having any idea of the impending challenges, first the pandemic, and then a spike in inflation globally due to supplychain disruption because of the Ukraine war. “The heavy lifting, which actually happened [before the challenges], prepared us for a situation which no one could imagine.”
She said economic challenges are generally cyclic and occur once in a decade or 15 years. Every government had to face these challenges and pull the country out of it, she added. She said the country faced challenges in 1991 when the government took steps to avert the crisis. “So was the situation in 2013-14. The Modi government faced the challenges and pulled the economy out of it again. But new challenges came again in the form of the Covid-19 pandemic in 2020.”
The finance minister said the resilience of India amid the economic crisis faced by the world has been recognised globally. She cited the three key policy measures that received global appreciation—the Prime Minister Garib Kalyan Yojana (PMGKY) for free dry ration to 800 million poor every month, the ₹4.5 lakh crore sovereignguaranteed credit facility to small and medium businesses called Emergency Credit Line Guarantee Scheme (ECLGS) and the Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (AB-PMJAY), a health insurance scheme.
Citing a KPMG report, she said PMGKY reduced the probability of people cutting down consumption of utilities by 75% despite the pandemic. The report also showed the PMGKY reduced the probability of borrowing money by 67% of beneficiaries covered by the survey.
She said under ECLGS, as of March 2022, over ₹3.19 lakh crore loans have been sanctioned and the scope of the scheme has been extended till 2023. Quoting another report on the health scheme (Ayushman Bharat), she said its implementation led to about a 21% decline in out-of-pocket health expenditure and an 8% reduction in the tendency to borrow for emergency health purposes.
She said digitisation made delivery of goods and services easy and helped the government’s Covid-19 vaccination programme. “No other country had a systematically developed [such digital] platform,” she said. “We are moving forward. We are showing the way in digitizing the economy.”