Finance Minister Nirmala Sitharaman said on Tuesday that the war between Russia and Ukraine had disrupted supply chains around the world, including in India. Replying to a debate on the Finance Bill, 2022, she also said India remained one of the top five destinations for foreign direct investment (FDI).
Sitharaman said the revival from the Covid-19 pandemic was an ongoing job. “We are focusing on growth and recovery with a predictable tax regime. We are facing the situation of a full-blown war, which is having an impact on all countries. This war is having an impact on supplies; value chains are broken; and global markets are caught up in a situation where nothing is normal, ”she said in the Rajya Sabha.
The Upper House passed the Appropriation Bill and the Finance Bill, and referred them back to the Lok Sabha. Being money bills, the Rajya Sabha’s clearance was not necessary.
As Russia’s invasion of Ukraine draws out, global commodity prices have surged, creeping into domestic inflation. Benchmark oil prices dropped on Tuesday, extending losses from the previous day after Russia called peace talks with Ukraine constructive and China’s new lockdowns to curb the spread of coronavirus hit fuel demand, Reuters reported. Brent crude, however, still stayed above the $ 100 a barrel mark.
Retail inflation for February breached the Monetary Policy Committee’s target band and rose to an eight-month high of 6.07 percent. Wholesale inflation in the month rose to 13.11 percent. The finance minister said that according to the United Nations Conference on Trade and Development (UNCTAD), India remained one of the top five destinations for FDI.
She said that during the seven years of the Modi administration so far, FDI inflows totalled $ 500.5 billion, 65 percent more than the amount received in the 10 years of the UPA government.
This came after members of the Opposition pointed out that FPIs had pulled out Rs 1.15 trillion from the markets this calendar year. By nature, FPI investment is more short term than FDI investment.
The government had proposed 39 amendments to the Finance Bill. These included changes to the crypto tax regime, penalties, and re-computing income disallowing cess and surcharges. Sitharaman said the Central Board of Direct Taxes would soon issue a notification so that there was no confusion among investors on 1 percent tax deducted at source on cryptocurrency.
She said the Modi government did not take the taxation route to mobilize resources during the last two years of the pandemic.
“We did not impose a Covid tax. It was a clear direction from the Prime Minister that we should continue with a predictable tax regime to ensure continued recovery. As per the OECD, 32 countries had raised various taxes – be it personal tax, corporate tax, environmental tax, health tax or excise duties, ”she said.
Responding to a question from the Opposition benches on devolution to states, Sitharaman said that for FY22, which ends on March 31, Rs 8.35 trillion had been devolved to states from the divisible tax pool, higher than the revised estimate of Rs 7.45 trillion. She said that this included net dues to states accumulated from 1996-97 to 2014-15, worth about Rs 43,000 crore.