Finance Minister Nirmala Sitharaman today underscored a five-pronged strategy for sustainable global economic growth, with inflation control and government-led investment being the key measures. She named investments in health and education, climate finance and diversification of supply chains as further necessary measures for a sustainable recovery of the global economy.

Speaking at the B20 forum – one of the G20 forums in New Delhi today, Sitharaman said: “Prolonged elevated interest rates can stand in the way of economic recovery.”

Sitharaman urged central banks around the world to also look at growth-related priorities, saying: “The tendency to use interest rates as the sole solution to fight inflation has its own downsides. Most economies have this problem because of the obsession with using currency.” The role of central banks in today’s context is to keep an eye on growth and related priorities while controlling inflation. The budget deficit must be contained or inflation will not be healthy, defeated or brought under control.”

“The second priority is to increase the focus on investment to fuel growth. The public sector must lead the way unless the private sector also steps in. This is the story that is happening in India. The Indian government is relentlessly focused on capital spending,” Sitharaman said, adding that countries must overcome post-pandemic constraints to ensure capital spending for sustained economic growth.

FM said the third priority for growth is investing in health and public infrastructure. “The fourth issue that is critical to sustainable growth is climate change financing. Some countries, such as India, funded their Paris commitment and met their nationally determined commitments from their own resources. The fifth point I think is very important for the recovery of the global economy is the diversification of supply chains,” she added.