Economy gaining from manufacturing boost: Nirmala Sitharaman

New Delhi: India continues to be the fastest-growing major economy, with all sectors contributing significantly, finance minister Nirmala Sitharaman said Thursday.

She flagged India’s manufacturing growth, citing India’s mobile phone and passenger vehicle exports.

“The second-quarter growth was very high – it is the highest in the world,” Sitharaman said, replying to a short-duration discussion on the state of the economy in the Rajya Sabha. “We continuously maintain that momentum of being the fastest-growing economy.”

The Indian economy grew a better-than-expected 7.6% in the September quarter from a year earlier.

She said India had become the fifth largest economy from being tenth in 2014. “The activities are all across the economy. It’s not as if one sector is doing well… All sectors are growing and growing significantly for us to notice it,” she said. She emphasised that the manufacturing sector is also contributing significantly to the economy on the back of measures taken by the government, including the Make in India programme and the production-linked incentive (PLI) scheme.

India is the second most sought-after manufacturing destination in the world, she said, according to Cushman & Wakefield.

FM Cites ET Editorial
Sitharaman said the unemployment rate had declined to 10% from 17.8% in 2017-18, brushing aside assertions by the Opposition that joblessness was on the rise. She said 135 million people have come out of “multi-dimensional” poverty in the last five years.

On prices, the minister said that the government had taken “quite a few” measures to check inflation.

Prime Minister Narendra Modi had focused on four pillars – the poor, farmers, youth and women – among others, she said in an address at the Global Economic Forum 2023 in the national capital organised by the Department of Economic Affairs and the Confederation of Indian Industry (CII) lobby group.

The minister highlighted the need for bolstering female participation in every sphere of the economy.

“We need more women in policymaking, more women in the board rooms, more women in businesses and more women even on the shop floors,” she said.

The finance minister said the execution of schemes has made a difference, contrasting this with the programmes of the previous UPA government. She assuaged concerns about savings, adding that household savings are also going toward asset creation. On the rupee, she said the Indian currency remains stable against an ever-strengthening dollar, attributing this to the fundamentals of the economy.

Carbon Tariffs
Sitharaman voiced her concerns against the “one-sided” move by advanced economies such as those of the European Union (EU) to impose tariffs on high-carbon goods coming from other regions, saying it’s “not moral” and goes against the interests of the Global South. The green agenda shouldn’t be pursued by some at the expense of others, she said.

Pitching for inclusive global growth, the minister said: “I will impose on you a certain tax because you are coming up with non-green products. And with that money, I will make my industry green. The border adjustment tax logic just goes against the concern of the Global South.”

She stressed that every country must try and garner funds to meet their green commitments but that resource generation must not be at the cost of poor and developing countries. “If anything, it’s not moral at all,” she said.

The EU’s plan to impose tariffs ranging from 20% to 35% on products such as steel and cement through the Carbon Border Adjustment Mechanism (CBAM) will go into effect in 2026.

Sitharaman also cited an editorial in ET during her Rajya Sabha statement while responding to a comment by former finance minister P Chidambaram.

“The former finance minister made a very linear comparison as to how the GDP has grown from 1991-92 to Rs 25 lakh crore, then Rs 50 lakh crore and Rs 100 lakh crore and then wondered that if I will say that by the end of 23-24, India will have a Rs 100 lakh crore as GDP,” she said. “If I heard him, he said, going by the trend of doubling every 10 years, it might. I would refer to one editorial today which appears in a paper. I am not saying my view… There is an editorial in The Economic Times today, which says ‘A $4 Trillioning Plus We Go! GDP Expected to Catch up in the coming fiscal’.”

She then quoted directly from the editorial: “As India’s GDP rises, would market cap rise in tandem? Though there is no direct correlation there could be significant wealth effects that provide tailwinds to the economy.”

She then went on to say: “So linking that to the growth of the GDP itself, the editorial in a paper which is a pink paper, which observes the Indian economy, we get a picture and a probable answer to the former finance minister.”