Ukraine War Impacting All Countries Like Pandemic, "Supply Chains Broken," Says Finance Minister

Finance Minister Nirmala Sithararaman, responding to the budget discussion in the Rajya Sabha, where the parliament approved the budget 2022-23, said the Russia-Ukraine war is impacting all countries similar to how the pandemic did, with the "supply chains broken."

Crude oil prices have shot up since Russia invaded Ukraine on February 24, with benchmark Brent crude touching multi-decade highs of near $140 a barrel. While crude oil prices have been whiplashed since Russia attacked Ukraine, they have remained above the $100 mark. 

The Finance Minister said the unprecedented hike in oil price was a challenge.

She also highlighted that the government had not raised taxes during the pandemic or had not used the tax route to fund the recovery process. 

Ms Sitharaman said, "no tax was increased to fund recovery process," or that the government had "not taken taxation as a route to resource mobilisation."

Despite that, Ms Sitarman said, Rs 8.35 lakh crore devolved to states from central taxes in the current fiscal, higher than the revised estimate of Rs 7.45 lakh crore for FY22.

She also noted that India remains in the top 5 foreign direct investment (FDI) recipient countries, as per a UNCTAD report.

Ms Sitharman said the FDI inflows were $500.5 billion under the Narendra Modi government, 65 per cent higher,  which is 65 per cent more than the amount received in the 10 years of the United Progressive Alliance (UPA) government, as investors have trusted the economic management of the current regime.

Replying to the discussion on the Finance Bill, 2022, and Appropriation Bill, 2022, the finance minister said India continues to remain among the top five foreign direct investment recipient countries in the world,

The FDI inflow in 2020-21 was USD 81.72 billion compared to USD 74.9 billion in the preceding financial year.

Despite the covid pandemic, she said the government did not resort to taxes for resource mobilisation and no tax was increased to fund the economic recovery.

On the other hand, as per an OECD report, as many as 32 countries had resorted to an increase in their tax rates to fund their economic recoveries.

India's quick economic recovery post the pandemic and the budget initiatives will help sustain growth momentum in the years to come said the Finance Minister.

"India's sharp economic recovery in 2021-22 and Budget measures have prompted international rating agencies to forecast a real GDP growth above 8 per cent in 2022-23. This will sustain the growth momentum in the economy," Ms Sitharaman said.

Still, the government is conscious of balancing emphasis on growth, economic recovery, and inflation added the Finance Minister.