Nirmala Sitharaman (Agencies photo)
NEW DELHI: Finance minister Nirmala Sitharaman on Wednesday advised industry to realign its supply chain factoring in political and strategic considerations to ensure that there was no concentration of risks, a statement that appeared to be aimed at China.
“When you talk of supply chains, when you want to restore supply chains to frictionless supply chains, let’s not forget, it’s not just economics, it’s more than that. When we want to de-risk ourselves, when we want to remove certain concentrations, plus one, plus two, what are these theories? They didn’t emerge out of inefficiency of economics. They emerged out of economic principles being influenced by political principles. Therefore, we have to build into our own decision making not just economic sense, but also political and strategic sense.
“Supply chains will have to be restored, but you would reset it, you would realign it, you will make sure that they are spread so much that no political or geo-political or strategic risks will threaten our well-being,” FM said at a CII event.
The statement came amid repeated demands from industry to lift restrictions on Chinese investment and visas that came following the outbreak of Covid and the subsequent tension in Ladakh. In fact, the Economic Survey too had made a case for lifting investment curbs. While the border stand-off has eased, business ties have not normalised, and industry players are clamouring for a softer stance despite government’s clear emphasis on building a resilient supply chain with other countries and locating production facilities in India through schemes such as production linked incentives.
Sitharaman also used the platform to underline the need to check unnecessary expenditure and borrowings. “Responsible economies can’t be run with borrowings so large that the next generation and the generation after that have to repay. All this will have to be passed through as taxation… Debt is required but in this coming decade our priority should be to manage the finances and borrow for building assets, borrow for managing better, but it cannot be such borrowings that you leave the next generation worried about how to service it.”
Besides, she flagged global conflict and inflation as major global concerns.
“Inflation is so contagious that nowhere is any country’s effort today is completely successful, because beyond its powers are inflation, forces which come in,” she said amid conflicts in West Asia and Ukraine, which have disrupted supply chains and stoked inflation in several parts of the world. The comments come at a time when central banks in several countries have reduced key policy rates, while RBI has so far maintained a status quo in the wake of higher inflation.
“The attempt of both industry & govts everywhere should be to restore global calm and normalcy. There can nowhere be enough justifiable reason for skirmishes or war. The global priority for this decade should be to restore normalcy. They are the main cause for disruptions in supply chain, inflation and other global challenges.”
