'Economic slowdown is not so bad in India & China': Nirmala Sitharaman

Marco Green
October 21, 2019

In her intervention during International Monetary and Financial Committee (IMFC) Plenary Session, Union Finance Minister Nirmala Sitharaman said that the global economic risks and imbalances reinforce the need to strengthen global co-operation at the multilateral level, besides governmental initiatives.

With all that being said, "the point can not be missed" that India is still "growing the fastest" in the given global scenario, Sitharaman observed.

Asked how a cessation of trade hostilities between the USA and China, a key cause of the flight of investment from China, would impact her plans, the finance minister said, "The government's decision is just not going to be purely on the basis what is happening today - between the U.S. and China - but that could either aggravate the situation or (bear) influence at some level - but the fact remains that some companies are looking at relocating for various other reasons also".

"I will identify those multinational corporations ... who are moving out of China or who probably are contemplating it", she said, and added,"I will make a blueprint with which I will approach them and put forward to them as to why India is a far more preferable destination and make every attempt to invite them to India".

The International Monetary Fund (IMF) should provide solutions that are specific to important growth geographies to help alleviate the current conundrum, Sitharaman added. "The IMF [in its latest projections] reduces the growth [rate] for all the global economies", she said, according to Hindustan Times. I wish it can grow faster. "But even otherwise, even with that India is still growing as the fastest growing economy".

Observing that several things about the economy are sentiment-driven, the Union Finance Minister accepted that, "It's not growing as much as it used to grow earlier".

"It's not eight. It's not seven. Over in about that for those companies, even if they continue to be in China but still would want to produce from elsewhere either to export or to capture a new hub, domestic market like India", Sitharaman said.

To a question, Sitharaman said at this stage she is "not looking at how long", but expecting if she is looking at green shoots. The finance minister, however, said her decisions would not be purely on the basis of what is happening presently between the United States and China, which are locked in a trade war over discriminatory tariffs.

When asked if the slowdown of Indian economy is cyclical or structural, Sitharaman said it may be both, may not be both, may be partly one or may be partly the other. "I don't have the luxury of sitting and looking at which way it is going", she said.

"I'm allowing that margin already". Besides, Sitharaman led the Indian delegation to the G20 Finance Ministers and Central Bank Governors meeting in which the deliberations centred on worldwide taxation and "Stablecoins", which are cryptocurrencies pegged to a stable asset.

"I respect Dr Manmohan Singh for telling me not to do the blame game".

Other reports by Click Lancashire

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