Trade talks between India & US to conclude soon: FM
Finance Minister Nirmala Sitharaman also said that India's aim of being a $5 trillion economy and a global economic powerhouse by 2024-25 is 'challenging' but 'realisable'
NEW YORK: Trade negotiations between India and the US are going well and will conclude sooner than expected, Finance Minister Nirmala Sitharaman has said.
Last month, India and the US failed to announce a limited trade deal in New York during the meeting of Prime Minister Narendra Modi and President Donald Trump, due to still prevailing differences over the package including access Washington has sought to Indian markets for medical devices, such as stents and knee implants, information and communications technology (ICT) products and dairy products with the removal of price caps.
India is keen on a fair and reasonable trade deal in which its request for market access is secured while also addressing the trade deficit issue raised by the US.
"I think the trade talks would conclude sooner. The talks are going on very well. Yes, we couldn't conclude it before the Prime Minister's (Narendra Modi's) visit (to the US) happened. But both sides are engaged with all commitment," Sitharaman said here on Tuesday.
Sitharaman gave a lecture on 'Indian Economy: Challenges and Prospects', which was organised by the Deepak and Neera Raj Center on Indian Economic Policies at Columbia University's School of International and Public Affairs.
During a question and answer session that followed, Sitharaman was asked about the trade talks between New Delhi and Washington.
Trade tensions between India and the US have been rising with President Donald Trump, championing his 'America First' policy, complaining that tariffs imposed by New Delhi on American products were "no longer acceptable"
to his country.
Minister of Commerce Piyush Goyal and US Trade Representative Robert Lighthizer are continuing their efforts to resolve some of our differences.
Sitharaman was also asked about Nobel Laureate Abhijit Banerjee's comments that the Indian economy "is doing very badly" and when the economy is going into a "tailspin" is the time when one should not worry about monetary stability but about demand.
She responded that the government is focused on boosting consumption. She said steps have been taken to push liquidity through Non Banking Financial Companies and through the banks to reach the ground level.
In the budget presented in July, Sitharaman had announced Rs 100 lakh crore for the next five years for building public infrastructure. The minister said stronger infrastructure would boost consumption.
She said the government had formed a task force which
will help front-load a large part of this money for infrastructure.
"I'm not waiting to even spread it over five years. I'm willing to front load it, even as the projects come through," she said.
Director at the Raj Center and former NITI Aayog Vice Chairman Arvind Panagariya said recent tax cuts announced by the government would go in the same direction of boosting demand.
"(It) leaves a lot more in the hands of the corporates to invest, so investment is also demand. When we say demand we think only of consumption as demand but investment is also demand," Panagariya said.
Asked about the problem of joblessness in India and severe credit crunch, Sitharaman said at no point has she conveyed that enough had been done to tackle the issues and that now the economy has to revive.
Finance Minister, underlining that more reforms are on the anvil before the close of the fiscal year, said, “Prime Minister Narendra Modi's vision of making India a $5 trillion economy and a global economic powerhouse by 2024-25 is “challenging” but “realisable.”
Sitharaman indicated that Indian economy has been on growth tragectory even since the Modi government came to power in 2014.
“In 2014, when the National Democratic Alliance (NDA) was voted to power by the world's largest democracy, India was a $1.7 trillion economy. In 2019, India has become a $2.7 trillion economy, having added one trillion US dollars in the last five years. Our vision to become a 5 trillion dollar economy by 2024-25 is challenging, but it is realisable, Sitharaman said.
She also emphasised that a $5 trillion economy will make India a global economic powerhouse moving it from the 7th to 3rd position in terms of current dollar exchange rate.
The Modi government has underlined its priorities in the first 50 days of its second term, setting sights on making India a $5 trillion economy and hitting the ground running on spurring growth.
She said that the realisation of the government's goal is not fraught in uncertainty but is connected to a single-minded dedication to reforms, the evidence of which is there for the world to see.
“To become a $5 trillion economy, India's GDP needs to go faster than what we grew at an average of 7.5 per cent in the last five years. That's a matter of fact statement. Inflation needs to be at 4 per cent to ensure commensurate increase in purchasing power, she said, adding that inflation in the last five years was 4.5 per cent and has been on a declining path to reach 3.4 per cent in 2018-19.
She stressed that fixed investment rate needs to increase from 29 per cent to 36 per cent in the course of the next five years, with some depreciation of the rupee.
“We are well and truly on our way to becoming a $5 trillion economy by 2024-25. A five trillion dollar economy will make India a global economic powerhouse moving us from the 7th to 3rd position in terms of current dollar exchange rate.
“However our ambition to become economically strong has been driven more by our desire to become a less poorer nation, she said.
Sitharaman said that in July 2019 when she presented the first budget of the second term of the Modi government, India's GDP had decelerated in four consecutive quarters.
“Yet we projected the GDP to grow at 7 per cent in 2019-20, slightly higher than the 6.8 per cent realised in 2018-19. Even when our GDP decelerated in the fifth successive quarter, we did not revise downwards our projections as some institutions around the world have already done,” she said.