Finance Minister Nirmala Sitharaman on Wednesday said the Centre has set clear goals to reduce its fiscal deficit in the next financial year, and expects the states to cooperate on the same so that the country can achieve its goal of becoming a developed nation by 2047.
Speaking at an economic conclave in New Delhi, Sitharaman said greater transparency in budget-making and bringing down the debt-to-GDP ratio are slated to be the government’s core focus areas.
“The central government has set clear goals for transparency in budget-making, ensuring that fiscal management is visible to all and meets the highest standards of accountability. As a result, we have been able to bring down the debt-to-GDP ratio since the post-COVID period, when it had crossed 60 per cent. It is now on a declining path,” she said.
Post Covid, India’s debt-to-GDP had shot up to 61.4 per cent, but came down to 57.1 per cent in 2023-24 after the adoption of certain policies by the central government. The government plans to reduce it to 56.1 per cent this year.
Calling upon the states to be more accountable and transparent in fiscal management, she said borrowing money to repay loans and not develop infrastructure is a poor play in the fiscal terrain.
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“Unless the debt-to-GDP ratio is managed better and kept within the FRBM limits, and the stock of debt, which is being accumulating over the years with a high rate of interest that many states are unable to service, is brought down, you will only be borrowing to service the loans, not borrowing for developmental expenditure. That’s a poor play in the fiscal terrain,” the minister said.
She also talked about global trade getting increasingly “weaponised” through tariffs and other measures, and denounced accusations that India is a “tariff king”.
India, she said, placed tariffs only to safeguard its domestic industries against flooding from “predators”.
“Trade is getting weaponised through tariff and many other measures… India will have to negotiate its way carefully in this and not just take care of tariffs. But, I think that overall, our economic strength is what is going to give us that additional advantage,” Sitharaman said, adding that it’s “very clear” that global trade is neither free, nor fair.
While some nations say that tariffs are not good and no one should take these measures, we “suddenly have newer people coming up saying we’ll come up with tariff barriers and there’s no questioning. So that seems to be the new normal”, she added.
Sitharaman’s remarks come in the wake of high tariffs slapped by the US on most countries, including India, disrupting trade flow across the world. More recently, Mexico too announced high tariffs to be imposed on countries that it does not have free trade agreements with.
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