Finance minister Nirmala Sitharaman has said that even though the Indian economy is projected to grow as much as 7% this fiscal, “we remain concerned about the global economic outlook and geopolitical environment”. Participating in a joint World Bank-International Monetary Fund (WB-IMF) Development Committee meeting in Washington DC on Friday, the minister stressed that the current turmoil requires a greater coordinated approach to ensure the global economy bounces back.
Despite a slowdown in its growth this fiscal, India will remain the world’s fastest-growing economy. The IMF has forecast its FY23 growth for the country at 6.8%, more than double the expected global economic expansion rate for 2022. The multilateral body has also predicted that India will emerge as the world’s third-largest economy by FY28. Nevertheless, external headwinds, mainly subdued global growth rate and risks emanating from the Ukraine war, remain a key challenge for the Indian economy, as its export growth has started slowing down and commodity prices remain volatile.
In a discussion on the food and energy crisis, Sitharaman also called on the multilateral bodies to refrain from having a “unidimensional view” of subsidies and to differentiate between distortive subsidies and targeted support to the vulnerable sections of society. For instance, by offering free LPG connections under the Pradhan Mantri Ujjwala Yojna over the last six years, the Indian government has ensured that access to clean cooking methods has achieved near saturation for women in India, she said. This has substantially contributed to the improvement of India’s performance on several key parameters of sustainable development goals.
Similarly, on the issue of climate financing, the minister highlighted that the world must never lose focus on the internationally agreed basic principle of common but differentiated responsibilities for developed and developing countries. A one-size-fits-all approach must be avoided, she added. She also called for raising the World Bank grants from the current 5% to support projects with huge climate impacts beyond national borders.
During her intervention, the minister told members of the Development Committee that while the quest for energy and food security necessitates the non-exclusion of fossil fuels from our energy mix, India has set up its first pure hydrogen producing facility and its first 2G bioethanol refinery this year.