Finance Minister Nirmala Sitharaman, while addressing the Lok Sabha during the debate on the Union Budget for FY26, strongly advocated for free trade and globalisation.
She emphasised that despite the global economic uncertainties and trade restrictions imposed by some countries, India should continue to support an open trade environment. Her remarks come at a time when international markets are witnessing increasing trade barriers and economic fragmentation.
She countered criticism that the government had cut capital expenditure and reduced allocations for welfare schemes to meet its fiscal goals.
Sitharaman clarified that the entire borrowing by the government is effectively being utilised for capital expenditure, ensuring continued investment in infrastructure and development.
The minister stressed the need for fiscal prudence, pointing out that rising debts globally pose a significant challenge.
She highlighted that the Union Budget's primary focus is on boosting growth, improving household sentiments, and fostering financial inclusion. The government is aiming to strike a balance between development needs and responsible financial management.
Sitharaman reiterated the Centre’s commitment to rural prosperity, stating that the government is focusing on enhancing agricultural growth, strengthening the MSME sector, and increasing investments and exports.
These areas, she said, are the key drivers of economic expansion and will help India maintain a steady growth trajectory.
The finance minister acknowledged the ongoing global challenges, including the Middle East conflicts, the Russia-Ukraine war, and economic stagnation in various regions. She noted that these factors are creating economic uncertainty for developing nations, making it crucial for India to navigate carefully.
On the fiscal deficit, Sitharaman stated that the Budget has set a target of 4.4% of GDP for FY26, lower than the 4.8% projected for the current financial year. She assured that there has been no reduction in financial transfers to states, with Rs 25.01 lakh crore allocated for FY26.
Discussing capital expenditure, she pointed out that the effective capital expenditure is estimated to be 4.3% of GDP, aligning with the government’s commitment to sustained economic investment. She maintained that responsible fiscal management remains a priority while ensuring that crucial sectors receive adequate funding.
Addressing concerns about the rupee's depreciation against the US dollar, Sitharaman cited former RBI Governor Raghuram Rajan, stating that the currency movement is part of a larger global trend.
She explained that the strengthening of the dollar has impacted multiple global currencies, and the depreciation of the rupee is not an isolated issue. Since December, the rupee has weakened by 3% against the US dollar, and analysts predict that it could further decline to 88 per dollar by the end of March.
Inflation management was another key point in the finance minister’s address. She assured that controlling inflation remains the government’s top priority, particularly food inflation, which is currently being closely monitored.
She credited improvements in the supply chain and agricultural advancements for helping stabilise food prices. The NDA government, she noted, has managed to bring food inflation down to 5.3% over the past decade.
Sitharaman concluded by reinforcing the government’s vision of economic resilience and growth. She emphasised that despite global uncertainties, India remains committed to maintaining a robust economic framework that supports trade, investment, and financial stability.
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