India, US see inflation driven by external factors a challenge

New Delhi: India and the US on Friday expressed concern over high inflation which is being driven by external factors and has become a challenge for both nations.

Speaking at the US-India Businesses and Investment Opportunities, Finance Minister Nirmala Sitharaman said in India the inflation challenges are prompted more by external factors.

"So while the number today is in a manageable range, the challenges are largely due to the import of crude. About 85 per cent of all petro needs that we consume are imported...The external factors causing a stress on inflation is something that we have to be mindful of," the minister said during a question-answer session at the event.

Sitharaman further said both the Reserve Bank of India and the finance ministry are working together to tackle inflation.

Secretary of the Treasury Janet Yellen, who also addressed the forum, said the global economic outlook at present is extremely challenging.

High inflation, she said, is a challenge that many advanced and developing countries face in common and central banks are trying to deal with the problems.

"In part this inflation reflects the spillover of Russia's brutal war in Ukraine, which is boosting energy and food prices and for many emerging markets that have found themselves with high debts and high interest rates, the cost of moving higher energy and food costs are the things that have made debt unsustainable for some of them.

"So I think that is something we will have to deal with something going forward," Yellen said.

Answering a question on investments in India, Sitharaman said the national investment pipeline and the national monetisation pipeline are expected to supplement one another.

Stressing that the monetisation activity is going at full speed, the minister said, "investment from our side on Rs 9,000 crore on infra projects is absolutely on course. The way we have opened FDIs and FPIs, the ecosystem for investment in India to ensure favourable investment returns is all being worked in consultation with industry".

Sitharaman also invited investments from the US saying labour costs in India are competitive compared to many other countries.

"So this is a time for concrete plans, to have a guidance given to business to come together, to have transfer of certain technologies without hesitation to joint venture partners so that you can do business without any insecurity...," she added.

The roundtable interaction was attended by top business leaders from both the countries.