Union Finance Minister Nirmala Sitharaman on Monday said the government is closely monitoring the impact of the West Asia crisis on the Indian economy, with special focus on the ‘3Fs’ – fuel, fertilizers and foreign exchange reserves. Stressing that the country’s economic fundamentals remain strong, she said the Centre’s policy response has been calibrated to protect growth while managing external pressures.
Speaking at a function held on the occasion of the 37th anniversary of the Small Industries Development Bank of India, Sitharaman said the recent reduction in excise duty on petrol and diesel will lead to a revenue loss of about $1 crore to the government, news agency PTI reported.
“Challenges driven from outside”
The Finance Minister said that the rise in crude oil prices and the sharp increase in fertilizer costs have become a major concern for the economy. She described fertilizer prices as reaching “unimaginable” levels and also pointed to rising gold prices as a challenge on the external sector front.
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“There is a need to focus on the three P’s of fuel, fertilizers and foreign exchange,” Sitharaman was quoted as saying by PTI.
At the same time, it confronted what it described as attempts to create panic over the economic situation. Without naming anyone, the minister criticized “naysayers” for presenting a bleak picture despite what she said were positive efforts being made across the country.
“All the good that common people themselves do is forgotten. A pessimistic and cynical narrative is created, which is not true,” she said.
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“We have to appreciate that the challenges are driven from outside. We must also realize that India’s domestic economic situation remains positive and resilient even today,” the Foreign Minister said.
“India cannot afford to create fear. We need to give confidence to the people with our words and actions,” she added.
Dues to micro, small and medium enterprises remain a source of concern
Sitharaman also raised concerns about delayed payments to micro, small and medium enterprises $An amount of Rs 8.1 lakh crore remains locked due to pending dues.
The minister urged public sector enterprises to ensure payments are made to micro, small and medium enterprises within the stipulated 45-day period and warned against unnecessary delays.
India calculates the economic cost of the war
The economic impact of the conflict in West Asia has begun to be reflected in India’s fuel and import outlook, with the government citing the need for cautious spending amid growing global uncertainty.
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Earlier this month, Prime Minister Narendra Modi urged citizens to spend wisely and avoid non-essential purchases such as gold and travel abroad, citing concerns about the economic fallout from the conflict.
Closing the Strait of Hormuz
The closure of the Strait of Hormuz has also raised concerns about possible disruption to supplies of petroleum products and urea, both vital imports for India.
Fuel prices have witnessed repeated increases over the past two weeks. State-run oil marketing companies on Monday raised gasoline prices by 100% $2.61 per liter and diesel prices $2.71 per litre. Since May 15, the cumulative increases have now reached their limits $7.35 per liter of gasoline $7.53 per liter diesel.
(With inputs from PTI)
