Sitharaman: Inflation lower despite higher contraction than 2008-09

Responding to the budget discussion on the concluding day of the first part of this session, Sitharaman defended the document, saying it focused on boosting growth and creating jobs through public spending amid the pandemic.

She said the government’s handling of inflation was “robust” and that it has taken measures across sectors to ensure increased employment.

“In order to attain growth, we wanted to undertake public expenditure in building infrastructure for a modern India,” she said, adding that the government is looking to infrastructure for giving a stimulus to the economy.

She drew a comparison between the inflation now and during the global financial crisis, with respect to the contraction in the economy.

“In 2020-21, the -6.6 per cent contraction is one of the biggest the Indian economy had to go through. I just want to highlight that (in 2008-09) the contraction was only to the extent of Rs. 2.12 lakh crore. Now, the contraction is Rs. 9.57 lakh crore… because of this pandemic. But, in spite of the supply-side disruptions, India’s CPI inflation now is at only 6.2 per cent,” she said, adding that during the “smaller crisis” in 2008-09, the CPI inflation was 9.1 per cent.

Speaking on taxing cryptocurrency, Sitharaman maintained her earlier stand. ”We have taxed the profit emanating from the transactions. I am not doing anything to legalise it or ban it… legitimate or illegitimate is a different Question… But I will tax it because it is a sovereign right to tax.’’

Responding to accusations made by members of the opposition that numbers in the budget were different from those in the Economic Survey, the Finance Minister said that the comparison made was “misleading” as “the Economic Survey draws its source of information from one particular set of data” while the government looks at advance estimates.

Sitharaman also clarified that the government has announced the creation of 60 lakh jobs through PLI-driven exercises but that employment will be generated across sectors, with the Rs. 7.5 lakh crore spending on public infrastructure also creating jobs.

“The latest periodic Labour Force Survey indicates that the urban unemployment rate in January-March quarter of 2021-22 has declined to pre-pandemic level of 9 per cent after peaking at 20.8 per cent of unemployment… So, the unemployment issue is being addressed and the unemployment numbers are coming down. November 2021 saw a net addition in the EPFO subscription peaking at 13.9 lakh new subscribers, an increase of 109.21 per cent over the previous year. This is the highest ever achieved since 2017,” she said.

The FInance Minister said the increased allocation to the Ministry of Housing and Urban Affairs was not because of the Central Vista but the PM Awas Yojana-Urban in which the allocation has been enhanced from Rs 8,000 crore to Rs 28,000 crore.

She said allocation has been increasing in the health sector — from Rs 64,000 crore in 2019-20, Rs 80,026 crore in 2020-21, Rs. 85,950 crore in the Revised Estimates of 2021-22 and Rs 86,606 crore in the 2022-23 budget.

“Expenditure on Covid-related health preparedness had received Rs 12,000 crore in 2020-21, and more than Rs 15,000 crore in 2022-23. So, for preparedness we have given that money as well. The allocation for the Ministry of Health and Family Welfare, which was Rs 64,000 crore, has gone to Rs 86,606 crore,” she said.

Sitharaman said that technology and digital adaptation are also instruments through which the government wants to work, and therefore have been prioritised in the budget.

She said that start-ups are also being encouraged as a major driver of growth and employment.

The minister said that fertilizer subsidies have been increased despite the increase in the global prices.

She added that “a high-level committee (was) to be formed for understanding how best we can have more resources within India through the PEs and also Venture Capital Funds for enabling more such funding of start-ups.’’