Indian economy will do well in the coming quarters, despite spillovers of high US interest rates, Finance Minister Sitharaman said. The investment starting to come from the country’s private sector is expected to boost the economy in the near future, she said. Also, the minister expressed confidence in Prime Minister Narendra Modi’s return to power in 2024 with “good numbers” as she believes that the government has delivered on its promise.
In an interview with The Economic Times, Sitharaman said that while some items may be experiencing inflation, "broad-basket inflation" was steady, and RBI was looking at the country's needs rather than synchronize its activities with other central banks.
Some individual commodities may be seeing a price surge and "all the perishables, and also vegetables, because they are all short-duration, and because of the way the monsoon (has progressed)...it (inflation) can see recurrence," the finance minister said.
"But overall, I think the basket itself is steady," she said, adding that most central banks are becoming more considerate of growth-related concerns.
Responding to a question on private sector investment, the finance minister said the buzz at last week's B20 summit couldn't have happened if Indian companies were still hesitating. "No, they now want to actively be in the game, also become big players - big, meaningful and impactful players, each according to their size."
"I think the Indian private sector has come into the game...investors are coming forward, industry is coming forward," she said, emphatically asserting that private sector capex had taken off.
Sitharaman said the economy will do well in the next quarter (July-September). An ET poll last week showed GDP may grow 7.8% in the April-June quarter from a year earlier.
"For India, this coming quarter is the quarter when people open up their purses (festive season)... you would have enough reasons to believe that the demand situation is going to only go up. So, I expect the next quarter (GDP figures) will also do well."
Responding to a question on the interest-rate cycle in India in view of the recent vegetable-induced spike in inflation, the finance minister said India's central bank is looking at the needs of the domestic economy.
"So, to that extent, the 'high for long' may not be anywhere close to what our banks, our central bank is thinking is my understanding," Sitharaman said, responding to questions on the likelihood of 'high for long' interest rates in the US and the implication of such a state of affairs.
"I won't say you are sufficiently insulated or not (from high US interest rates), but I would only say I think we know how to handle either a surge or a depression coming out of it," she said.
The finance minister said several of her counterparts lauded India for doing a good job of "content, conduct, and process" at the G20 and putting out a strong agenda on four issues - debt, MDB reforms, crypto assets, and digital public infrastructure - apart from infrastructure for future cities and financing to deal with climate change.
On the Hindenburg report, Sitharaman said some short sellers can make a killing, but regulatory tools coming out of it can also lead to better corporate governance. "But what I'm looking at is SEBI (Securities and Exchange Board of India), with what it does, is able to see the grain from the chaff. Regulatory tools, if used properly, coming out of this can lead to better corporate governance."
