India has enough fiscal space to push capex, support sectors impacted by West Asia crisis: FM

New Delhi, April 6: Finance Minister Nirmala Sitharaman on Monday said fiscal prudence has given the government enough room to push capex and support sectors impacted by the West Asia crisis.
Besides, she said the Reserve Bank can go in for further rate cut to deal with the emerging situation.
Highlighting the importance of a good public finance policy in challenging times, the Finance Minister said, it improves the counter-cyclical capacity , especially the ability to ‘lean against the wind’ in economic downturn.
Today, many countries with high debt and large deficits have no room to manoeuvre and they face a grim choice between austerity and instability, she said at an event organised by the National Institute of Public Finance and Policy (NIPFP) here. On the contrary, she said, “India has fiscal space – room to maintain our capex programme, room for the RBI to cut rates, room to offer targeted support to affected sectors. This is the dividend of a decade of fiscal discipline. This is the strategic value of fiscal prudence that pays dividends across decades.” Therefore, she said, India has been able to reduce the excise duty on diesel and petrol; and specific exemptions were given on critical petrochemical products and SEZs to operate in Domestic Tariff Area. The government had on March 26 slashed excise duty on petrol and diesel by Rs 10 a litre as it looked to shield consumers from the impact of rising global crude prices amid the ongoing war. Global crude prices have risen by almost 50 per cent since the United States and Israel launched military strikes against Iran on February 28, triggering sweeping retaliation from Tehran.
The government also imposed an export duty of Rs 21.50 per litre on diesel and Rs 29.50 per litre on aviation turbine fuel (ATF).
Excise duty on petrol has been slashed to Rs 3 a litre, while on diesel it is zero currently. On April 2, India exempted import of critical petrochemical products from customs duty to ensure supply stability and provide relief to consumers of final products amid disruption in shipping routes due to the West Asia conflict. Besides crude, India is major importer of fertiliser and natural gas.
Observing that the current year is even more challenging than the previous one, Sitharaman said, “the escalation of Middle East conflict has evolved from a regional security concern into a systemic tremor threatening the vital arteries of global energy, and hardening the lines of a new, multipolar world order.” (PTI)