‘Not in denial about inflation,’ says Nirmala Sitharaman in Rajya Sabha

Union Finance Minister Nirmala Sitharaman on Tuesday told Parliament that the Centre was not in denial about inflation in India and that the Reserve Bank of India has taken steps to control it, NDTV reported.

“The Indian economy is in a better situation compared to the economies of developed nations,” Sitharaman said, according to India Today. “But that does not mean the government is running away from saying... because of imported inflation and global commodity crisis, we are being impacted. These are the realities. Nobody is in denial on price rise.”

Her statement came a day after she claimed that India had controlled the inflation at 7% despite disruptions caused in the economy due to the Covid-19 pandemic, the Omicron variant of the coronavirus and border tensions with China.

India’s retail inflation came down to 7.04% year-on-year in May, after touching an eight-year high of 7.79% in April. However, the price rise indicator remained above the Reserve Bank of India’s tolerance band of 6% for the fifth month in a row.

Since the beginning of the Monsoon Session on July 18, the Opposition has been demanding a debate on inflation by suspending all other businesses.

On Tuesday, Sitharaman also responded to the Opposition’s criticism about the levying of Goods and Services Taxes on essential items such as wheat, rice and pulses. She said that a 5% tax was levied on packed and labelled commodities and not on items that are sold loosely.

“The food items consumed by the poor are not taxed,” she said.

Sitharaman said that the decision on levying the tax was taken at a meeting of the GST Council, and no state objected to it. “All states at the 47th GST Council meeting agreed to the proposal to levy 5% GST on pre-packed, labelled food items and not one person spoke against it,” she said.

However, on July 18, Kerala Finance Minister KN Balagopal claimed that the state government had opposed the proposal in meetings of the GST Council.

He had said that the Kerala government had demanded that luxury goods should be brought back under the highest GST slab rate of 28%. The tax rate on such items had been reduced to 18% and 12% before Assembly elections.

Meanwhile, Sitharaman on Tuesday said in the Rajya Sabha that GST has not been levied on cash withdrawals from bank accounts, crematoriums, hospital beds or intensive care units.

“GST has not increased the burden on families,” she said. “The rate [of taxation] on some of the items prior to GST was far higher.”

The Trinamool Congress walked out of the House during Sitharaman’s speech. Rajya Sabha MP Derek O’Brien claimed that the matters raised by his party were not discussed.

Sitharaman, however, said that she responded to every matter raised by the Trinamool Congress, including cesses, liquefied petroleum gas, GST and the depreciating value of the rupee. “You [O’Brien] just walked out the moment I said [that] in West Bengal, pre-GST, paneer had a VAT [Value Added Tax on it,” she said.