Need a fiscally fit India to become a developed nation by 2047, says Finance Secretary

Finance Secretary TV Somanathan

India needs to be fiscally fit to run the marathon of becoming a developed country by 2047, Finance Secretary TV Somanathan told Moneycontrol in an interview on February 2.

"This Budget has spoken repeatedly about making India a developed country by 2047... therefore, we have focussed on deploying fiscal resources optimally in the pursuit of that long-term goal," Somanathan said.

Finance Minister Nirmala Sitharaman on February 1 in her interim Budget speech said, "we are working to make India a ‘Viksit Bharat’ by 2047. For achieving that goal, we need to improve people’s capability and empower them."

The finance minister said that the next five years will be years of unprecedented development, and golden moments to realise the dream of developed India at 2047, adding that the trinity of demography, democracy and diversity backed by ‘Sabka Prayas’ has the potential to fulfill aspirations of every Indian.

In the interim Budget for 2024-25, the government chose the path of aggressive consolidation by lowering the fiscal deficit target by a huge 70 basis points to 5.1 percent of the GDP for the next fiscal.

If the Indian government manages to meet its target for next year, it would mean that it would have to reduce it by a further 60 basis points in 2025-26 to achieve its medium-term target.

Finance Secretary's focus on fiscal fitness echoes this sentiment.

In fact, on January 29, the finance ministry in a report titled 'The Indian Economy: A Review', authored by officials from the office of the Chief Economic Adviser V Anantha Nageswaran, said it is "eminently possible for the Indian economy to grow in the coming years at a rate above 7 percent" given the strength of the financial sector and "other recent and future structural reforms".

The Indian economy has been growing faster than anyone anticipated, with the statistics ministry's first advance estimate pegging GDP growth in 2023-24 at 7.3 percent, 80 basis points higher than the Reserve Bank of India's (RBI) estimate. The Indian central bank has since raised its growth forecast to 7 percent.