“Western economies took a certain formula for dealing with the stressed economic situation (that emanated from the Covid-19 outbreak). They had a recipe with which they wanted to attend to their economies,” Sitharaman said while addressing an interactive programme organised by Thinkers Forum in Bengaluru. Many of the Western developed economies adopted that method — like printing more currency and distributing it among people — in dealing with the stress in their economies.
That method, according to Sitharaman, has now proven hurtful as an aftereffect in their respective economies.
“The methods they adopted resulted in huge cash in the economy. As a result, inflation has shot up the roof,” she said, referring to those countries where inflation had touched multi-decadal highs.
“During COVID, many developed economies printed & distributed money. This formula resulted in double-digit inflation in their economies, something which wasn’t seen there in 30-40 years.”
She said some advanced economies having the possibility of going into recession may push India’s exports down as a spillover effect.The recessionary phase will have spillovers worldwide, she added.
Earlier in her address, she also spoke about the ongoing war in Ukraine. She noted it may be a war happening in Europe but it had “global repercussions”.
Both countries involved in the conflict have a key role in the supply of various essential commodities.
Ukraine supplies foodgrains, edible oils, and some military equipment and pharmaceuticals, whereas Russia supplies fuel, fertiliser, and grains.
“Every one of these items in the global markets came under severe stress.
Sanctions happened (for Russia), and Ukraine was in no position to send its grown grains outside, therefore global grain markets gets affected,” Sitharaman said.
“COVID wasn’t even completely over when the war in Europe began and it had global repercussions. Fuel prices went up & food insecurity was seen in many countries.”