Finance Minister Nirmala Sitharaman said the upcoming decades will see the steepest rise in living standards for common man, and added that those will be will be a “period-defining era” for Indians.
Speaking during an economic conclave attended by national and international economists, Sitharaman presented an encouraging picture for the country while laying down a roadmap for economic progress.
“India will continue to grow over the decade, the global backdrop is no longer the same. In the early 2000s, emerging markets like China grew relatively easily due to a favourable global trade and investment climate. This poses a potential challenge and an opportunity for India. For this, India has to develop its domestic capacity,” she said.
Looking at the challenges before the country, as it seeks to double its per capita income, the finance minister observed that several conflicts may worsen, posing a threat to global peace which is the bedrock of prosperity.
She said India also faces the challenge of dealing with legacy emissions of the developed world and managing the country's energy transition.
The advent of new technologies may leave a more lasting impact on labour, including workers at all levels, than previous industrial revolutions did, she further said.
The finance minister told economists from India and abroad that the resulting economic and social impacts may be more profound than the world has experienced. “While this is a global phenomenon, it is more acute for India, given its vast young population and the need to create livelihoods for millions. It is also a question of the kind of society we wish to create that people gathered here and outside have to reflect upon.”
Talking about India’s defining factor, Sitharaman said from a purely domestic perspective, India’s youthful population provides a large base for productivity improvements, savings, and investment.
“A nation’s greatest asset during its high growth years is a young population. India needs to ensure that they are cognitively equipped, emotionally strong and physically fit. That is a core policy priority.”
As the young population ages, the consumption will also rise over the coming decade as 43 per cent of Indians are younger than 24 years old, and they are yet to explore their consumption behaviour fully, she observed. Simultaneously, a rising middle class will pave the way for strong consumption, inflow of foreign investment and a vibrant marketplace.
India is relying on innovation to find solutions and fuel growth. Sitharaman said India’s financial system was well-capitalised to fuel productive credit as the global geopolitical re-positioning can act as a structural force to India’s advantage by creating robust supply chains with countries with strategic congruence.
“India benefits from the new international order, which is reshaping better to reflect the power distribution of today’s world.”
Sitharaman said the government continues to uphold its commitment to reduce the fiscal deficit and improve the quality of government expenditure. “Aided by buoyant revenue generation, restrained revenue expenditure growth and healthy economic activity, the fiscal deficit is estimated to decline further from 5.6 per cent of GDP in FY24 (provisional actuals) to 4.9 per cent in FY25."
She said that Modi government has initiated and sustained reforms across infrastructure, banking, trade policy, investment, and ease of doing business. “Ensuring that the financial system stays healthy and the cycle lasts longer is another of our core policy priorities. Innovation and rapid advancements in total factor productivity are required in coming decades.”