Food should not become an instrument in war and disruption amid increasing fragmentation caused by conflicts and re-globalisation, which have adversely impacted supply chains, said Union Finance Minister Nirmala Sitharaman on Friday, underscoring the importance of food security amid geopolitical uncertainty. She also discussed India’s efforts to reduce its overall debt, so that it does not burden the coming generations.
“Our efforts to bring down debt are streamlined to meet India’s aspiration requirements, but with a sense of responsibility so that our next coming generations don’t feel the burden. We need to be sure that money spent has its right returns,” she said while speaking at the Kautilya Economic Conclave 2023 here.
India’s external debt-to-GDP ratio declined to 18.6 per cent at the end of June 2023, from 18.8 per cent at the end of March 2023, according to the Reserve Bank of India’s data.
The finance minister urged countries across the world to consider regional balance in sourcing their food supplies, especially staple, and essential products. She cautioned against over-reliance on global sourcing due to the associated risks. “If you depend on global sourcing, you also will have to factor in the global risks…. Can any one country or any one region afford to have food at that risk level?” Sitharaman said.
Addressing a gathering of eminent economists, she expressed concern over the declining effectiveness of multilateral institutions, including the International Monetary Fund (IMF), the World Bank, and the World Health Organization. She suggested that these organisations are less effective today than when they were established and “because they have become less effective, what we took for granted is no longer to be taken for granted.”
The minister highlighted the report by the G20 independent expert group on MDB (multilateral development bank) reforms for providing a document that could be discussed and used. “Everyone has agreed that indeed these institutions will have to be reformed.”
She also touched upon the issue of terrorism, describing it as “the elephant in the room”. Sitharaman warned that businesses must factor in the impact of global terror when making decisions. “Businesses can no longer be attracted by just policies or by just openness, open economy. They are also going to factor in the magnet that is going to attract terrorists,” the minister said.
Sitharaman discussed the reshaping of strategic blocs from the Cold War era and the perceived end of globalisation. “Reglobalisation is happening…Certainly, it has an impact on the economy because the supply chains get influenced,” she said.
Regarding fiscal management and responsibility, the finance minister noted that the government is actively looking at the data related to the debt of some emerging market countries and how they are managing them. Additionally, she mentioned a global consensus on establishing a system for cryptocurrency regulation, saying “cryptocurrency is not something where any one country can succeed… The G20 is now coming out with a template for the crypto world.”