India has met the fiscal consolidation trajectory set for 2025-26 and will work towards bringing the government’s borrowing down to 50% of gross domestic product (GDP) by 2030, said Union finance minister Nirmala Sitharaman on Sunday in the US.
Speaking to members of the Indian diaspora in Chicago during her official visit to the US, Sitharaman said the government stayed on its planned path of fiscal discipline, with the country’s fiscal deficit at 4.4% of GDP in 2025-26.
“We have given ourselves a fiscal discipline path on the fiscal deficit as well. We have fulfilled the trajectory. The last mile that had to be reached by 2025-26, we have reached,” she said.
She said the government had set a target of bringing borrowing down to 50% of GDP by 2030. “We have set ourselves a certain target, which is to bring the borrowing down to the 50% level of GDP by 2030. Therefore, I will be working on that path.”
She contrasted India’s debt position with that of some advanced economies. “There are advanced economies whose debt is well over 200% of their GDP even now,” she said.
Defending the government’s fiscal approach, Sitharaman said improvements in India’s credit ratings were not the result of cuts to social welfare spending. “The world has witnessed the fiscal prudence of honourable Prime Minister Shri Narendra Modi when he was the chief minister of Gujarat and when he is the Prime Minister of the country. Our credit ratings are improving,” she said.
“But that’s not by cutting corners. That’s not by stopping the resources which have to go for social welfare. It is through proper management of the economy,” she added.
She also called for greater participation from the Indian diaspora, including through capital, ideas and talent, as the government works towards its 2047 target of making India a developed economy.
“2047 is the target year set for achieving Viksit Bharat. It’s hardly 20 years from now. So, the speed and scale with which the reforms are happening require a lot more support,” she said.
“Lots more support from people who are talented and have exposure. Lots more support from people who can give ideas for us to carry it forward. And, above all, support in terms of capital, which is so required for a country to meet all its aspirations,” she added.
On global disruptions
The finance minister also highlighted how the government responded to disruptions in global supplies of fertilizers, crude oil and liquified petroleum gas, including higher shipping insurance premiums caused by geopolitical risks.
“The fertilizer shortage was not felt in India because we managed to keep the markets informed about how much we would require,” she said, adding that global supplies had shrunk and challenges had increased across crude oil, LPG and fertilizers.
“Ships going to procure these supplies were unable to secure adequate insurance cover. Risk premiums had gone up significantly,” Sitharaman said.
She said the government had subsequently supported additional insurance premiums for shipping liners through a budget announcement.
“Through a budget announcement, we made a pool of funds available so that any additional premiums paid by shipping liners due to the risks involved would be supported by the government. As a result, Indian farmers, Indian households and Indian logistics did not suffer,” she said.
She said the government’s ability to track global uncertainties while assessing domestic requirements had helped India remain resilient. “By continuously keeping track of global uncertainties while understanding India’s own requirements, we have managed to stay resilient.”
“Many countries have seen their calculations go haywire amid these uncertainties. Thankfully, despite our limitations, we have kept our citizens protected in this challenging environment,” she added.
Sitharaman is on a nine-day visit to Canada and the US from 25 August to 2 September. During the visit, she is meeting investors and business leaders and is scheduled to represent India at the G20 Finance Ministers and Central Bank Governors’ meeting in Asheville, North Carolina, on 31 August and 1 September.
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