Maintaining India’s growth is the topmost priority, says FM Sitharaman

Finance Minister Nirmala Sitharaman

Finance Minister Nirmala Sitharaman on July 26 said that maintaining India’s economic growth remains the topmost policy priority, noting that it directly overlaps with job creation and inclusive development. She emphasised that the country’s economic momentum has been largely driven by sustained public capital expenditure, even as global economic institutions grapple with rising uncertainty.

“Maintaining growth is the topmost priority, which overlaps with creation of jobs,” the Finance Minister said. “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,” she added, reaffirming the government’s commitment to continue capital spending to support macroeconomic stability.

She was speaking at a release event of the book “A World in Flux: India’s Economic Priorities. Essays in Honour of Dr. Shankar Acharya”.

Top Policy Priorities

Sitharaman outlined the three key priorities that are guiding India’s economic and geopolitical strategy. First, maintaining economic growth with a strong focus on employment generation. Second, defining the voice of the Global South and ensuring it remains relevant in shaping international policies and institutions. Third, creating a supportive economic ecosystem for aspiring sections of society.

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

FDI and Investment Climate

On the investment environment, Sitharaman highlighted the role of both central and state governments in attracting foreign capital, especially through a favourable FDI policy framework.

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

Multilateral Institutions in Limbo

Reflecting on the geopolitical flux and institutional drift globally, Sitharaman said the world economy is becoming increasingly complex and fragmented.

The Finance Minister emphasised on a calibrated policy approach for India to play a leadership role in global economic restructuring, even as it navigates turbulent international headwinds.

“Multilateral institutions are all now wondering about their immediate future; they are left in a limbo,” she remarked. Recalling India’s G20 presidency, she added, “During India’s G20 presidency, top of the agenda was reforming multilateral institutions.”

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