Finance Minister Nirmala Sitharaman speaks in the Lok Sabha on February 11, 2025. Photo: Sansad TV via PTI
India’s economy is in the midst of “a speedy rebound” after a brief moderation in the second quarter of this year, Finance Minister Nirmala Sitharaman said on Tuesday, asserting that the Union Budget 2025-26 has sought to address the immediate challenges facing the national economy amid “immense” global uncertainties.
Responding to the discussion on the Budget in the Lok Sabha, Ms. Sitharaman said the Budget very clearly spoke of the various means through which the Centre wants to increase the liquidity available to the people, and aims to uplift households’ sentiments, spur private sector investments, and accelerate growth.
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‘Strong economic foundations’
Stressing that India’s economy grew by an average of about 8% in the three years prior to 2024-25, Ms. Sitharaman said: “Only in two of the last 12 quarters has the growth rate touched 5.4% or remained below it. I want to inform the members that on account of strong economic foundations, a speedy rebound is happening and we shall take measures which will, going forward, help keep our economy as the fastest growing economy as it has in the last few years.”
Private Final Consumption Expenditure (PFCE), the Minister pointed out, is expected to grow 7.3% in 2024-25, driven by rural demand. Overall, PFCE is estimated to be at 61.8% of nominal GDP, the highest level since 2002-03.
Global uncertainties
The Budget has come at a time of immense uncertainties and changes in the global macro-economic environment, when issues of global concern like persistent conflicts, stagnation in global GDP, and sticky inflation in the emerging markets also have an impact on India’s budget, she said. These are “vitiating the atmosphere” for all developing economies, she noted.
While these uncertainties have weighed on the Budget-making process, the government has sought to balance national developmental priorities with fiscal imperatives, Ms. Sitharaman underlined. She also addressed some members’ concerns about money being denied for capital expenditure projects.
‘Capex outlays up’
“I heard occasionally this argument being put forward, saying, has the paradigm shifted from capital expending because that gives a greater multiplier effect to giving people, the taxpayers, some money in their hands… No, capital expenditure outlays have not come down at all. On the contrary, they have gone up,” she said.
The effective capital expenditure for 2025-26 is pegged at 4.3% of GDP, which is 0.1% lower than the fiscal deficit of 4.4% of GDP, the Minister said. “What does it indicate? The government is using almost the entire borrowed resources for financing effective capital expenditure. The borrowings are not going for revenue or other committed expenditure… It’s going only for creating capital assets,” she emphasised.
Published – February 11, 2025 10:08 pm IST
