Rating agencies should consider pandemic challenges, the Finance Minister says.
India is urging global credit rating agencies to look at its fiscal deficit and debt numbers in the context of the stimulus spending requirements posed by the COVID-19 pandemic, Finance Minister Nirmala Sitharaman said on Saturday.
Stressing that the government’s infrastructure spending push would have an ‘immediate impact’ on core sectors, opportunities for labour, and demand creation at the industry as well as consumer level, the Minister said she expected the Indian economy to recover and record good, sustainable growth in the next decade.
“Spending is being taken up even with borrowings, but we have also given a glide path on the fiscal deficit management,” Ms. Sitharaman said.
“We are spending but we are also very clearly telling even the credit rating agencies that every country is going through the pandemic and every country has to spend to keep the stimulus going,” she said in an address at the 65th foundation day of the All India Management Association.
“So every country’s rating will have to be in relative terms, and not just into the silo of India, ‘x’ or ‘y’ country. So spending, borrowing are all relative terms and we would want every institution to look at it with a sense of the relative understanding and context,” Ms. Sitharaman said.
“However, because we have given the glide path, the fiscal deficit is something we will watch probably after the stimulus giving has shown clear impact on the ground,” she added.
Urging the industry to have confidence in the Centre’s infrastructure building strategy as ‘it is not just short-term relief’ but investments whose impact could last for the “next 5-6 years,” Ms. Sitharaman said it was now time for the industry to step up and invest.
“Post the corporate-tax reduction, I have been waiting to see expansion happen from the private sector in India. Now, the policy is clear and consistent, and ease of doing business is still going further,” the Minister said.
“I would like now to see private investors in India coming forward with that so-called animal spirits to show that it is possible for India to pull up and keep it high as one of the fastest growing economies. It is now on your shoulders entirely,” she said.
“With all your participation, involvement and ideas coming to us, I expect the Indian economy to recover and recover such that we are an exemplar for the entire world,” she said.
Privatisation for good
The Minister also said the government was privatising public sector units not for them to be closed down but for improving their operational efficiency with professional skills available outside the government.
“We want them to be kept running. For an economy like ours, which has a high demand for many of these items of production like steel, coal or copper, that public sector firms have been making for decades now, the economy still needs them,” the Finance Minister said.
“So, when we are selling it away, it’s not as though we are selling them away totally even if it ends up being closed. We want these institutions to be run better, and productivity to be improved over the next several decades,” she added.