On December 17, Finance Minister Nirmala Sitharaman stated that the use of tariffs and other measures to impact global trade as a "weapon" is rapidly increasing, and India must move forward cautiously in such a situation. She emphasized that the overall strength of India's economy would provide additional benefits in such scenarios.
This statement is significant because global trade has been disrupted due to the high tariffs imposed by the United States. Mexico has also recently announced high tariffs on countries with which it does not have a free trade agreement.
Addressing a program, Sitharaman stated, "It is now clear that global trade is not free and fair." She added, "Tariffs and other measures are being used to make trade a weapon. Therefore, India needs to negotiate cautiously, and merely dealing with tariffs will not suffice; our overall economic strength will provide additional benefits."
She continued, "India may be criticized for being too inward-looking or for being the 'king of tariffs.' However, tariffs have been misused as a weapon." The Minister also mentioned that India's intention has never been to use tariffs as a weapon. India has only protected its domestic industries to prevent situations where cheap goods from other countries or companies could harm local businesses.
The Finance Minister highlighted that today, tariffs are used as a weapon without any criticism, and some countries argue that tariffs are not good and should not be used. However, new players are now coming forward and imposing tariff barriers without any questions being raised. This makes it seem like this is becoming the "new normal."
In terms of financial management, Sitharaman stated that the central government has set clear targets to bring transparency and has reduced its debt levels. She urged states to do the same to help India achieve its goal of becoming a developed nation by 2047.
"The central government has set transparency goals while preparing the budget to ensure that financial management is visible to all and accountability is ensured," she said. As a result, after the pandemic, the government's efforts have helped reduce the debt-to-GDP ratio from 61.4% to 57.1% by 2023-24.
The government expects the ratio to fall to 56.1% this year. Sitharaman added that while states are borrowing to repay their debt, they are not borrowing for developmental expenditure, which is a poor financial strategy.