Modi flags inflation as a worldwide concern; warns against populism

Inflation has emerged as a scourge gnawing at the minds of policymakers all over the world, Prime Minister Narendra Modi has said in an interview with PTI a few days before the G20 summit in New Delhi. He also emphasised that debt management has turned into a matter of great concern for developing countries, underscoring the need to adhere to fiscal discipline by different state governments.

Modi said that policy stances by central banks were extremely important to “ensure that policies taken by each country to combat inflation do not lead to negative repercussions in other countries”. Countries could share experiences of how they responded to volatility of food and energy prices and their outcomes. India played its bit as the president of the G20 countries in ensuring coordination among the countries in this respect.

Incidentally, zooming inflation has become a headache for many countries, especially due to the stepped-up flow of cash in the market by the central banks in different countries to tackle the crisis during the Covid pandemic. With the crisis largely over, central banks and governments of different countries are trying to rein in the resultant inflation by raising key interest rates and absorbing liquidity from the market. India is not exception from this pattern of developments.

Modi remarked that his government’s handling of the Covid crisis made the entire world sit up and take notice of the “human-centric development model, rather than a GDP-centric view” that India followed. He also said that the “Sabka Saath Sabka Vikas” model could be the guiding principle for the welfare of the whole world.

The Prime Minister listed the successes during India’s presidency of the G20 and lamented the diffidence of the earlier governments in holding meetings in other towns and cities beyond the national capital. He pointed out that during the entire tenure of India’s presidency of the group, more than 200 meetings would be held in as many as 60 cities in all 28 states and eight union territories. “Over 15 million people in our country have been involved in these programmes or have come in touch with some aspects of them,” he remarked.

Modi highlighted the rapidity with which India jumped from being the 10th largest economy in the world to the fifth within a time window of less than a decade. He attributed the rise to the robust reforms – economic among other sectors – that his government unleashed in the past nine years. He also said that it demonstrated to the world that “India means business”, which other countries are admitting now.

“We have democracy, demography, and diversity with us. As I said, a fourth D is adding to it – development,” the Prime Minister remarked.

Modi emphasised the need for strict financial discipline. He also remarked that populism does not work in the long term and eventually extracts a high price. He also argued that “often the poorest and the most vulnerable” sections of the population suffer the worst of its consequences.

“Populism may give political results in the short term but will extract a great social and economic price in the long term,” Modi said. The remark was interpreted as a dig he took at freebies that were being distributed by some state governments.

He said that by 2047, India would rank among the developed countries.

“Our economy will be even more inclusive and innovative. Our poor people will comprehensively win the battle against poverty. Health and education and social sector outcomes will be among the best in the world… Corruption, casteism and communalism will have no place in our national like,” Modi said.

According to Modi, one of the successes of India’s G20 presidency was the delivery of a text of a multilateral convention on international taxation. He was of the opinion that it would allow countries and jurisdictions to move forward with a historic, major reform of the international tax system.
The Prime Minister said that his government’s vision of “welfare of all” was the guiding principle even at the international level since it attempted to work for including those who think their voices are not being heard.