Government’s inflation management is robust and it has handled the price rise during the COVID-19 crisis in a much more efficient manner than the UPA government did during the 2008-09 global financial crisis, Union Finance Minister Nirmala Sitharaman said.
Replying to the general discussion on Union Budget 2022-23 in Rajya Sabha, the Finance Minister noted that the Indian economy suffered a loss of ₹9.57 lakh crore during the Coronavirus pandemic while the loss to the economy during the 2008-09 global financial crisis was ₹2.12 lakh crore.
Sitharaman said Prime Minister Narendra Modi-led government has handled the much bigger crisis in a more efficient manner.
“CPI inflation of that time (2008-09 crisis) was 9.1%, for a reduction of only ₹2.12 lakh crore when the global financial crisis hit us. But when the COVID pandemic hit us, the loss to GDP was ₹9.57 lakh crore. Our management of inflation was such that it was only 6.2%. The opposition couldn’t handle the lesser crisis,” Sitharaman said.
Retail inflation, as measured by Consumer Price Index stood at 6.2% in 2020-21. Inflation rose in 2020-21 due to supply chain disruptions caused by COVID-19 restrictions, lockdowns, and night curfews, moderated during the current financial year. Retail inflation during 2021-22 (April-December) stood at 5.2%.
However, wholesale inflation based on the Wholesale Price Index (WPI), after remaining very benign during the previous financial year on account of pandemic induced weakening of economic activity, record low global crude oil prices and weak demand, witnessed a sharp uptick, rising to 12.5% during April-December period of the current financial year.
While WPI inflation has been higher in the current financial year compared to the previous year in all the three major groups, it was above 20% in ‘fuel and power’ group reflecting the high international petroleum prices, according to the Economic Survey 2021-22 tabled in parliament on January 31, 2022.
In order to give a boost to economic growth, Sitharaman said the government has decided to push capital expenditure.
“In order to attain growth, we wanted to undertake public expenditure in building infrastructure for a modern India. We thought of maximising the synergic outcome of infrastructure getting built in the forthcoming 25 years,” the Finance Minister said.
In the Union Budget 2022-23, Sitharaman sharply increased outlay for capital expenditure to ₹7.5 lakh crore in 2022-23, which is 35.4% higher when compared with the current year outlay of ₹5.54 lakh crore.
With capital expenditure taken together with the provision made for creation of capital assets through Grants-in-Aid to States, the ‘Effective Capital Expenditure’ of the Central Government is estimated at ₹10.68 lakh crore in 2022-23, which will be about 4.1% of GDP.
