The Centre on Tuesday asserted that the price rise and the inflation are linked to global development beyond the control of any country even as the Opposition parties during a debate in the Rajya Sabha appealed to the Government to acknowledge the problem and provide relief to the poor.
While members from the Opposition benches raised concerns over the rising inflation in the country and its impact on the common man, members of the ruling BJP claimed that the inflation rate was only at 7 per cent and that too mainly on account of external factors such as the Russia-Ukraine war and global disruptions. They also hailed the Government for navigating the economy in the right direction in such a troublesome time.
Replying to the debate, Finance Minister Nirmala Sitharaman said while nobody is in denial about the price rise, India’s macro-economic fundamentals are strong. “Indian economy, compared to the situation prevailing in many of our peer groups and in many of developed economies, is definitely much better,” she said.
The Minister claimed the poor’s consumption of any food item has not been taxed and 5 per cent GST has been levied only on pre-packed, labelled items and not on those items sold loosely.
“The more I listen to issues on the GST I am worried that the information is not reaching, rather there is misinformation. There’s no GST on cash withdrawals; GST is paid by the bank which takes the cheque books from its printer. It’s a matter of record that all States agreed to the proposal of GST on pre-packaged items. There wasn’t one person who spoke against it, there wasn’t a single disagreement,” the Finance Minister said.
“Debates are something that we respect and want to participate and I am glad today that we had this debate. Every State taxed some or the other food items such as cereal, pulses, curd, lassi, buttermilk, “she said. The Minister said today’s economic distress throughout the world needed to be looked at holistically.
On the inflation, the Minister said ideally the inflation should be kept below 6 per cent. “The Government has a targeted approach to reach sections that desperately need help. We are not saying we will not do anything more,” she said. Sitharaman said the RBI has registered its concern over the adverse effect of cryptocurrency on the Indian economy.
“At present, cryptocurrencies are unregulated in India. The Government has brought a comprehensive taxation regime for the transfer of virtual digital asset (VDA), including gifting of VDA. Cryptocurrencies are by definition borderless and require international collaboration to prevent regulatory arbitrage. Any policy framework on cryptocurrency can be effective only after significant international collaboration on evaluation of the risks and benefits and evolution of common taxonomy and standards,” she said.
On the weakening of Indian rupee against US dollar, the FM said the exchange rate of the rupee is determined largely by the market forces of demand and supply.
The government and RBI closely monitor the developments in the exchange rate of the Indian rupee, she said.
“The RBI regularly monitors the foreign exchange market and intervenes in situations of excessive volatility to curb it. It intervenes to maintain orderly conditions without targeting any specific level of the exchange rate. The Government and RBI calibrate macroeconomic policies on the exchange rate on a regular basis, the Finance Minister said.
Initiating the discussion, CPI (M)’s Elamaram Kareem said there has been a constant increase in prices of essential commodities in the last eight years of Modi Government. Despite record foodgrains, it is tragic testimony that farmers are fighting to get better prices and consumers are weighed down by high prices, he said, adding that the Government should have distributed the surplus stock to the poor through the public distribution system (PDS).
Accusing the Opposition of doublespeak on the Goods and Services Tax (GST), former Union Minister Prakash Javadekar said the Opposition had “unanimously” agreed for 5 per cent GST on pre-packed food items in the GST Council Meeting, but when talking to media outside, the same tax became “Gabbar tax”. For undertaking developmental work, he said funds are required. “Money does not come by printing but by generating income,” he said.
Sudhanshu Trivedi of the BJP said India’s current inflation is around 7 per cent, which is one of the lowest in the world. There are 63 countries where the rate of inflation is over 10 per cent.
Refuting Javadekar’s claims, TMC leader Derek O’Brien said rising prices of essential commodities coupled with imposition of the GST on pre-packed food items, which was not agreed by Opposition in the GST Council, and unemployment is affecting the poor badly. On top of it, rupee appreciation has put pressure on the economy, he said.
“We appeal to the Government as a constructive Opposition, first, you have to acknowledge the problem. If you do not acknowledge the problem, how will you fix the problem?” he said.
Brien further said the cess and surcharge has been increased to 20 per cent from 10 per cent 10 years ago. Two-third of it is collected by the Centre, thereby reducing the States’ share.
Echoing similar views, Congress leader Shaktisinh Gohil said, “People are fed up. In a democracy, the government should listen to the Opposition. But today it is not so.” Prices of vegetables to fuel have risen sharply and people are committing suicide due to unemployment, he added.
Earlier participating in the short-duration discussion AAP leader Raghav Chadha said this time rural India is also facing the inflationary impact -- both as a producer of food and as a consumer of goods. “The cost of food production for farmers in the past year has gone up by around 21 per cent. But his income has not gone up despite the assurances to double the farm income,” he said.
He noted there were several reasons for this inflation including energy taxation, service inflation, GST, cost pull inflation, income not rising in the ratio of increasing inflation, falling rupee, and collusion between the corporate and the government. Energy tax which is levied on fuels such as petrol and diesel is one the highest in the world and has a cascading effect on the common people.
While Mahua Maji of JMM raised the issues faced by the tribals and said poverty and inflation are creating havoc in the tribal areas, Rajani Ashokrao Patil of the Congress said women were the most affected by price rise. Even LPG cylinders distributed under Pradhan Mantri Ujjwala Yojana are not being used, she added.
Birendra Prasad Baishya of the AGP said the current inflation rate is high due to the Ukraine war and the coronavirus pandemic. Tiruchi Siva of the DMK said the Government has to take action to bring back the value of the rupee value to the level required.
While VVijayasai Reddy of the YSRCP said the present central government has failed to control inflation, Manoj Kumar Jha of the RJD on the occasion called for a discussion on inflation in healthcare.
Jayant Chaudhary of the RLD pointed out that the cost of farming has gone up significantly over the past few years.
