India's Economic Growth Top Priority, Public Capex Primary Driver: FM Sitharaman

Union Minister of Finance Nirmala Sitharaman said on Saturday that maintaining India’s economic growth is of topmost policy priority, while stating that it directly overlaps with job creation and inclusive development. Even though global economic institutions grapple with rising uncertainty, the country’s economic momentum has been largely driven by sustained public capital expenditure, she noted.

“Maintaining growth is the topmost priority, which overlaps with creation of jobs,” the Finance Minister said. While reaffirming the government’s commitment to continue capital spending to support macroeconomic stability, she stated, “Public capex has been one of the primary drivers of sustained economic growth. The level of India’s economic growth is largely on the back of public capex.”

As per a Money Control report, Sitharaman further pointed out the three key priorities that guide India’s economic and geopolitical strategy. The first is to maintain economic growth while having a strong focus on employment generation. She further said that defining the voice of the Global South and ensuring it remains relevant in shaping international policies and institutions was the second priority and thirdly creating a supportive economic ecosystem for aspiring sections of society is important.

“Are we supporting every aspiring section? We have to give them the ecosystem,” the minister said. She also noted that the government remains committed to fiscal prudence, including reducing the debt-to-GDP ratio, without compromising on growth-oriented spending.

Speaking about the investment environment, the FM highlighted the role of both central and state governments in attracting foreign capital, especially with the help of a favourable FDI policy

She said, “We need to make sure policy on FDI is friendly to get investments. State governments are competing to attract investments.” She also pointed that policy and public capex are the two principal instruments that have been driving economic momentum post-pandemic, in addition to previous reforms such as corporate tax cuts and the resolution of the twin balance sheet issue.

Further pointing out the global geopolitical flux and institutional drift, Sitharaman said that the global economy is becoming increasingly complex and fragmented. She emphasised on a calibrated policy approach for India to play a leadership role in global economic restructuring, even as it makes way through turbulent international headwinds.

The Finance Minister added that new global realities demand structural changes in governance frameworks. Talking about how current structures are no longer equipped to handle the challenges of the next 100 years, she added, “Now, new redefined multilateral institutions are needed.”