ADB Governors' seminar: Sitharaman calls for greater digital integration of economies

Seoul [South Korea], May 3 : Union Finance Minister Nirmala Sitharaman on Wednesday called for greater digital integration of economies. Speaking at the Asian Development Bank (ADB) Governors' seminar on the theme 'Policies to Support Asia's Rebound' in Incheon, South Korea, Sitharaman said that there will be reglobalization and underscored the need to re-energize globalization.

Nirmala Sitharaman said that the repatriations have helped economies sustain themselves. She further said that the cross border transfers should become simplified and called for more democratizing of enterprise.

Ministry of Finance in a tweet stated, "Union Finance Minister Smt. @nsitharaman, Governor for India in @ADB_HQ, participated as a panelist in the Governors' Seminar on the theme 'Policies to Support Asia's Rebound', held as part of 56th #ADBAnnualMeeting, in Incheon, South Korea, today."

It further said, "Besides FM Smt. @nsitharaman representing as Governor for India, Ms Sri Muly Indrawati, Indonesia; Mr Niels Annen, Germany; Mr Changyong Rhee, Republic of Korea; & @ADBPresident and Chairperson of the Board of Directors also participated."

"I would think there should be greater digital integration of economies. We saw a globalization phase. Now there is going to be a reglobalization. It's not as if we are going back on globalization. We need to re energize globalization, which slightly different terminology, but at the same time there has to be digital globalization. Unless countries and their systems talk with each other and the neighbouring countries, for instance, to start with, talk to each other's digital platforms," Nirmala Sitharaman said.

"The benefits of technology making life easy for citizens, particularly common citizens will never be achieved. Now you have a lot of migration of labour. People move to different parts of the country, but still they keep their roots intact," she added.

Nirmala Sitharaman noted that technology has made cross-border transfers easier. She said, "I can speak for India. And I can speak for Philippines. I'm sure the ministers here so repatriations have helped economies sustain themselves. Now, it is becoming even more expensive nowadays to repatriate. But what technology has done to us is that cross-border transfers are becoming easier. And with that economies survive and prosper, just as this labour who is gone or the specialist who has gone abroad is serving that economy as well. Cross-border should become simplified. Second, within a country at least, there should be a lot more democratizing of enterprise. The entrepreneurial skills will have to be alot more widespread spread within the country. No scaling up for some, few to become big and the others not conscious of time."

Sitharaman stressed that the protection of vulnerable sections has been India's prime focus as the government charted its course towards recovery from the COVID-19 pandemic, according to the Ministry of Finance's tweet. She highlighted India's focus on MSMEs and added that ensuring food security has been instrumental in the Indian economy's successful recovery from the pandemic.

Ministry of Finance in a tweet said, "FM Smt. @nsitharaman laid out the elements in the form of four 'I's that are essential for long-term sustainable growth for both Advanced and Developing economies: Infrastructure Investment Innovation Inclusivity." She stressed on the need to upskill labour as a pre-requisite to achieve industry 4.0 in full measure.

Responding to questions regarding how countries can support workers who will lose their jobs in the shift to net zero, Sitharaman said, "It is always a balancing act, particularly for a country like India where the population is very high and the youth component of our population is even better in favour of the country. So, you have to constantly keep balancing on your priorities for greening your economy."

She noted that the fear that technology will replace the human hand is "real and live." She called it "important" to equally see both the benefits of technology and transition to the greening. Sitharaman stressed that industries in India are very rapidly resetting themselves to bring in Web three to shift over to Industry 4.0.

"It is important for us to equally as much as we see the benefits of technology, as much as we see the transition to the greening is important. We also have to design some economy, some layers in the economy which will be labour intensive and provide them that skills. Even at this stage as I'm talking, industries in India are very rapidly resetting themselves to bring in the web three to move over to industry 4.0," Nirmala Sitharaman said.

"Now if the existing labour remains where they are, they are not going to be up-skilled to meet up with these technology infusions. There will be a crisis even for the manufacturer, so will be his next generation of workers. So, governments of the day together with industry will have to constantly, even as they balance this climate versus productivity move and invest more towards greening. You have to on the other side bring in skill sets which are required for more technology-driven society and that is where you will bring this work," she added.

Nirmala Sitharaman said, "Global North South politics, since I think the time when WTO was founded has had this little grievance that export of agricultural produce and also generally the trade, the voice of the south or voice of the emerging markets has not been heard at par with the voice of the developed countries."

She noted that subsidies for agriculture becomes critical for many of the economies. However, she stressed that these subsidies did not count at all. She further stated that the world has started feeling very sensitive in context of Russia-Ukraine conflict and COVID-19 pandemic.

"Why is fertilizer security important? Because it feeds into food security will all have to be talked again in the WTO with a rather open mind. Otherwise, even with food security completely well established in developed countries, many parts of the world even today are not sure will they get their stock of wheat coming next, even if they are willing to pay for it. The transit of goods from one part of the world itself has become difficult to the other part of the world. So insecurity leading towards starvation is not something which the world would have thought about in the last century," Nirmala Sitharaman said.

"We thought we had milk mountains. Milk rivers or butter mountains and granary of wheat. The lopsided way in which trade agreements have come about. And the World Trade Orgzation is trying to grapple with this situation, but sooner the solution is found, better it is for the global food sector," she added.

During the seminar, Nirmala Sitharaman highlighted India's systemic reforms facilitated by Digital Public Infrastructure, enabling timely conditional cash transfers when it was most needed.

Responding to a question whether conditional cash transfers will help the poor, Sitharaman said, "It has helped in India, at least during the COVID because, like the initial part of the discussion placed a lot of emphasis on system reforms. We did not just talk about short-term monetary policy, fiscal policy, long term, but we also placed a lot of emphasis on system reforms, the long-term reforms that you require in India. Luckily, because we had these reforms undertaken, we had this digital economy boom and also we facilitated with digital identity markers for people, as a result of which during the pandemic, even when economies were writing checks and posting it by the mail, we were able to transfer money directlyinto the accounts of the poor."

She called for making efforts for revenue moving to capital expenditure. She further said, "There should be an emphasis on capital expenditure to widen. You spend through the government for creating assets. When you do that, you immediately benefit the labour, benefit those who depend on semi-skills that they have. They're not fully skilled. So you're able to pump in wages through that route one, and by creating assets, you are also creating a better multiplier for the money that you're spending on these issues. But, larger debate remains, and it is applicable even to developed countries is that every attempt will have to be made to widen your GDP with newer areas of activity for which you need to give support."

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