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Finance minister Nirmala Sitharaman on Tuesday said that the “full blown” war in Ukraine had impacted all countries like the Covid19 pandemic due to disruption in supply chains and that the unprecedented rise in global oil prices was a challenge.
Sitharaman defended the 137-day hiatus in fuel price revision, saying the disruption in supply chains and the resultant increase in global oil prices due to the war in Ukraine was a “couple of weeks” phenomenon.
The minister said despite challenges India continued to remain among the top five foreign direct investment recipient countries in the world. The country, she said, had received $500.5 billion as foreign direct investment during the PM Narendra Modi led government, which was 65% more than the amount received in the 10 years of the UPA government, as investors had reposed trust in the economic management of the current regime.
“We are also facing the situation of a full-blown war in Ukraine …..it seems to be having an impact on all countries like the way the pandemic had”
Replying to a debate on appropriation and finance bills in Rajya Sabha, she defended the handling of inflation but acknowledged the ongoing war in Ukraine posed fresh challenges, including higher oil prices, and disruptions in supply chains.
“We are also facing the situation of a full-blown war in Ukraine …..it seems to be having an impact on all countries like the way the pandemic had….supply and value chains are all broken…” Sitharaman said. The Upper House later returned the two bills without any changes, other than those proposed by the government, completing the nearly two months long parliamentary process for approval of the Budget for the fiscal beginning April 1.
Petrol & Diesel prices
She said opposition members had stated that the war in Ukraine had been raging for a long time and fuel prices are being raised now. “Absolutely untrue,” she said. “The disruption and a resultant increase in the price of global oil and also disruption to supply are all happening since a couple of weeks ago and we are responding to it.”
Petrol and diesel prices have been raised by ₹4.80 per litre since March 22 – a record increase in any eight days since June 2017. Sitharaman said the government is taking various steps in response to the rise in global oil prices.
Private investment & recovery
The minister said the Budget for the next fiscal will attract private investment, and ensure a predictable economic recovery in the years to come. The minister said that while 32 countries (as per an OECD report) resorted to taxation to revive their economies, the Modi-led government did not increase taxes.
“We believe the govt and the pvt sector are partners in assuring development. There is no ‘us versus them’ when it comes to govt and the pvt sector”
“So you are in a situation where like during the pandemic we came up with a Budget and then came the second wave. This time we came up with budget continuity aimed at recovery…and then Omicron and now we also have a war whose impact has been felt by all of us,” she said.
She said the Prime Minister had directed that the Budget should not draw on resources by taxing people at this time when recovery is the most important element and that “we should find resources and fully continue with the predictable recovery that we were aiming at”.
Referring to issues concerning private investment, FM said following the pandemic, the government had stepped up the investment with a view to creating an environment to revive and sustain the economy.