We are watching US Fed decisions and global inflationary pressures very closely: Nirmala Sitharaman
The government will address the inclusion of aviation jet fuel (ATF) in the goods and services tax (GST) system before the GST Board, Finance Minister Nirmala Sitharaman said on Sunday, noting that high global prices fuel are a cause for concern.
Ms Sitharaman was responding to a call from Spicejet Chairman Ajay Singh to lower fuel excise duties at least temporarily as global crude oil prices hover around $90 a barrel, and to pursue inclusion of the ATF in the GST system.
“Of course not for the airlines, but the global price of fuel is now a concern for all of us. More so for the airlines because it [the sector] has not yet recovered from the pandemic,” the minister said during a post-budget interaction hosted by industry body Assocham.
Noting that the Omicron variant of COVID-19 occurred just as the civil aviation sector was on the verge of a revival with tourists traveling through the destinations, Ms Sitharaman said states have since brought back restrictions on domestic travel, and global travel is also affected. by quarantine standards, hitting the sector.
The decision to include the ATF in the GST, she pointed out, was not hers alone. “This is for the GST Council [to decide]. The next time we meet in Council, I will put it on the table for them to discuss,” she said, adding that she will also discuss the concerns of the aviation sector with the banks.
Ready for the “tantrum”
“The recovery of the economy is very clear… it may not be equal everywhere, but yet it is observable. I would call on Indian industry to make sure we don’t miss the bus this time,” the minister said during an interaction with the Federation of Indian Chambers of Commerce and Industry (FICCI), adding that the country missed when the “taper tantrum” after the global financial crisis was mishandled by the previous government. On the other hand, the minister said that the central bank and the government are above the situation this time.
“We can say with confidence that we are quite attentive to what is happening with regard to global strategic developments, the decisions of the American Fed as well as global inflationary pressures. We are following very closely. And I can assure the leaders here that we will not let the Indian economy suffer for lack of preparation,” she said, adding that lessons had been learned from the mistakes of the previous crisis.
“After the global financial crisis, the way, for whatever reason – I’m not getting into a fight about whether it was right or wrong – but indeed the result showed that an opportunity was missed insofar as the measures that have been taken [at] that time to ensure liquidity was available, and the tap was not turned off at the right time,” she recalls.
“As a result, India has become one of the five fragile economies. The temper tantrum was not handled well at all. We missed a great opportunity that was available at the time,” she concluded.