Finance Minister Nirmala Sitharaman has stated that the recent economic slowdown is only a temporary phase, attributing it to disruptions caused by the 2024 Lok Sabha elections.
She assured that the government remains committed to boosting capital expenditure and supporting key sectors to drive economic growth.
In an interview, Sitharaman explained that the first two quarters of the financial year were impacted by the election cycle, leading to a slowdown in spending.
However, she highlighted that despite these challenges, the government was able to revise its expenditure to ₹10 lakh crore and further increase it to ₹11.2 lakh crore in the latest budget.
The finance minister emphasised that the government is focused on strengthening the MSME sector, which plays a crucial role in employment generation and economic stability.
She pointed out that even during the Covid-19 pandemic, the manufacturing sector received support through initiatives like the Emergency Credit Guarantee Scheme. The government aims to continue providing assistance to small businesses, ensuring their long-term growth and sustainability.
Addressing concerns about tax reforms, Sitharaman clarified that these reforms are not linked to elections but are part of a long-term strategy to improve India's tax system.
She noted that efforts to make taxation more transparent and taxpayer-friendly have been ongoing for the past five years. She also revealed that a new Tax Act, the first since 1961, is in the works to modernise the system and enhance compliance.
Responding to questions about state-specific financial aid, Sitharaman said that the government has been actively supporting states like Bihar, Tamil Nadu, and Kerala through various schemes and financial assistance.
She also commented on freebie politics, cautioning against unsustainable populist measures that could burden the economy.
The finance minister touched upon the impact of social media on economic and political discourse, stating that public opinion is influenced by misinformation at times.
She reiterated that the government is committed to making well-informed decisions that prioritise long-term economic stability over short-term political gains.
Additionally, Sitharaman highlighted the importance of artificial intelligence (AI) in India’s economic growth and said that the government is investing in AI development to enhance technological capabilities across various sectors.
She also reaffirmed the Centre’s commitment to rationalising the GST structure, ensuring that tax rates remain fair and supportive of business growth.
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