Enough fiscal room to support impacted sectors amid war: FM

Union Finance Minister Nirmala Sitharaman on Monday said India has fiscal room to support sectors affected by the ongoing West Asia crisis, while the Reserve Bank of India (RBI) has ability to lower interest rates in order to address global issues.

Speaking at the Golden Jubilee Celebrations of the National Institute of Public Finance and Policy (NIPFP), Sitharaman said, “The escalation of Middle East (West Asia) conflict has evolved from a regional security concern into a systemic tremor threatening vital arteries of global energy, and hardening the lines of new multipolar world order.”

“India has fiscal space. Room to maintain our capex programme, room for RBI to cut rates, and room to offer targeted support to affected sectors. This is the dividend of a decade of fiscal prudence and discipline,” she said.

According to the minister, the global public debt has increased and the world economy is experiencing instability, uncertainty, complexity, and ambiguity. She did, however, note that India had the lowest overall debt-to-GDP ratio of any large economy, at 81 per cent.

Many countries around the world are dealing with the problem of having insufficient budgetary room to address the difficulties due to their failure to maintain fiscal restraint. She further said India’s foreign exchange (forex) reserves were in a robust position. She also said the present level of reserves was sufficient to fund imports for roughly 11 months.

Meanwhile, the Monetary Policy Committee headed by Reserve Bank Governor will announce its position on interest rate on Wednesday. There are a lot of assumptions that the RBI will not change the things. The Monday marked the start of the rate-setting panel's discussions.