FM Nirmala Sitharaman meets IMF MD Kristalina Georgieva, highlights capex commitment

The minister discussed a wide range of issues, including the current geopolitical situation and its economic impact, with International Monetary Fund (IMF) managing director Kristalina Georgieva, and highlighted the Indian government’s commitment to support growth through capital expenditure.

During the meeting with Georgieva on the sidelines of the ongoing annual spring meetings of IMF and the World Bank, Sitharaman also mentioned India’s accommodative fiscal stance accompanied by major structural reforms and strong monetary policies that have helped in the post-pandemic recovery.

India is expected to record the highest growth rate among large economies of the world.

Georgieva highlighted India’s well targeted policy mix that has helped the country’s economy remain resilient even with a limited fiscal space.

The IMF MD also praised India’s vaccination programme and the help extended to its neighbour and other vulnerable economies.

“Ms Georgieva highlighted the resilience of India, which remains the fastest-growing country across the globe despite challenges posed by the Covid-19 pandemic,” the finance ministry said in a statement.

India’s help to Lanka lauded

According to the finance ministry statement, Georgieva appreciated India’s help to Sri Lanka in tackling the latter’s economic crisis and assured that the IMF would continue to actively engage with the island nation.

Sitharaman and Georgieva also raised concerns about the impact of geopolitical developments on the global economy and the challenges linked to the rising energy prices. The Russia-Ukraine war has led to a surge in prices of energy and commodities across the world.

About India’s policy approach on economic revival, Sitharaman highlighted the government’s commitment to support economic growth through capital expenditure (capex) and underlined that the country’s accommodative fiscal stance accompanied by major structural reforms and strong monetary policies have helped in its post-pandemic recovery.

To achieve high growth, the government has raised capex by 35.4% for 2022-23 to Rs 7.5 lakh crore to continue the public investment-led recovery of the pandemic-hit economy. The capex last year was pegged at Rs 5.5 lakh crore.

Capital expenditure was India’s route to recovery from the impact of the pandemic, said Sitharaman.

“When the pandemic came, we realised that the best multiplier that we will have for the recovery of the economy would be for the government to spend money on building infrastructure. So, capital expenditure was our route to recovery,” she said at an event organised by Atlantic Council in Washington DC.

Sitharaman noted that the one big step that the government decided was not to tax people to get out of the pandemic. “Our revenue to rescue the economy was not going to come from taxing people. No ‘Covid Tax’ was levied on anybody,” she said.

Bilateral meetings

Sitharaman also met Sri Lankan finance minister Ali Sabry on the sidelines of IMF-WB Spring Meetings and discussed the current economic situation and its approach towards addressing the prevailing challenges in Sri Lanka.

The finance minister assured her counterpart that as a close friend and good neighbour, India will try to extend all possible cooperation and assistance.