Restoring normalcy should be top global priority, Sitharaman says

Restoring calm and normalcy should be the top priority for key stakeholders globally as wars and skirmishes disrupt supply chains, and stoke inflationary pressures, finance minister Nirmala Sitharaman said this week.

Sitharaman also listed the resource challenge in meeting climate goals as another decadal hurdle for the global community, apart from prudent debt management, industry-led skilling of youth, and coexistence of big and small firms, while addressing the opening plenary of the Global Economic Policy Forum in New Delhi.

Pointing to inflation as a global “contagion,” Sitharaman said wars are causing global supply chain disruptions and stoking inflation, posing a “big challenge” for all countries as the problem (inflation) “doesn’t respect borders.

The minister said the world earlier tasted success in widening supply chains based on the principles of efficiency and economy of scale.

“Today, would there be anyone in the audience who would disagree if I say, just economics doesn’t prevail; strategy prevails, politics prevails,” she said, while pointing to the disruption of global supplies because of geopolitical reasons.

On global efforts to mitigate climate risk, Sitharaman said finding resources is the biggest challenge.

“A lot of discussions happened, a lot of promises are made on the table, but nothing is realized,” Sitharaman said, pointing to the general reluctance by the developed nations to accept the “polluter pays” principle.

Last month, India had dubbed the rushed adoption of the COP29 climate funding deal, under which developed nations agreed to funnel about $300 billion annually by 2035 for developing countries to ramp up climate action, as an “optical illusion.” The amount is $1 trillion less than what emerging economies had been bargaining for at the COP29 UN Climate Change Conference in Baku, Azerbaijan, from 11 November.

“Climate change is something for all of us to commit ourselves to, like the intensity with which we are committed to removal of poverty,” she said. “I think, climate challenges have to be looked at from various different perspectives rather than just emissions.”

“Yes, emission is an indicator. It’s a diagnostic tool. But after that how do we solve the problem? Who puts the money in? Do we wait for a collective resource to reach us or is it that some of us will start doing our little bit for our own countries?” she said.