Sustaining Growth Momentum Top Priority Amid Global Risks: FM Sitharaman

Despite global economic uncertainties and a slowdown in India’s GDP growth to 6.5% in FY25, Finance Minister underlines public capital expenditure as the key driver of long-term growth.

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New Delhi (Economy India): Union Finance Minister Nirmala Sitharaman on Saturday reaffirmed the government’s unwavering commitment to sustaining India’s economic growth momentum, calling it the “highest priority” amidst global macroeconomic uncertainties and domestic headwinds.

Speaking at a policy dialogue in New Delhi, Sitharaman emphasized that public capital expenditure (capex) remains a critical engine for driving structural growth, employment generation, and crowding-in private investment.

“Maintaining the pace of economic growth is our top priority, especially when the global landscape remains fragile and uncertain,” the Finance Minister stated.

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📉 FY25 GDP Growth Slows to 6.5%

Sitharaman’s remarks come in the backdrop of India’s GDP growth slowing to 6.5% in FY 2024–25, a four-year low. This compares sharply to a robust 9.2% expansion in FY 2023–24, largely driven by post-pandemic recovery and global tailwinds.

Fiscal Year	GDP Growth Rate
FY 2023-24	9.2%
FY 2024-25	6.5% (provisional)
FY 2025-26 (Govt. Estimate)	~6.8% – 7% (targeted)

Analysts attribute the slowdown to a combination of softening global demand, tightened monetary policy, and geopolitical tensions affecting trade and capital flows.

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🛠️ Capital Expenditure as a Growth Multiplier

Highlighting the government’s strategic focus, Sitharaman said public capex plays a multiplier role in stimulating demand and productivity. The Union Budget 2025-26 had earmarked a record Rs11.1 lakh crore for infrastructure and capital investment, a 15.5% increase over the previous year.

“Capex is not just about physical assets—it drives job creation, improves logistics efficiency, and lays the foundation for long-term competitiveness,” she said.

Key allocations under capex include:

• Rs2.8 lakh crore for Railways modernization
• Rs1.7 lakh crore for Roads and Highways
• Rs1.2 lakh crore for Green Energy and EV infrastructure
• Rs1.5 lakh crore for state-level infra support under the 50-year interest-free loan scheme

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📉 Global Challenges Persist

Sitharaman acknowledged the volatile international environment, including:

• Weakening growth in major economies like the US, China, and EU
• Persistent supply chain disruptions
• High global interest rates and inflation
• Rising geopolitical instability (Ukraine war, Red Sea crisis)

She said these external factors make it even more important for India to strengthen domestic demand and invest in productivity-enhancing reforms.

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🔄 Private Investment and Reforms

The Finance Minister urged the private sector to step up investments, especially in manufacturing, clean energy, and digital services. She also cited key ongoing reforms:

• PLI schemes across 14 sectors
• Disinvestment and asset monetization
• Ease of Doing Business 2.0
• Digital public infrastructure rollout (UPI, ONDC, DigiLocker, etc.)

“The private sector is now in a better position to invest, thanks to improved balance sheets, lower NPAs, and healthy corporate profits,” she said.

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🧑‍🎓 Employment and Inclusive Growth

The government is also focusing on employment-intensive growth, particularly in manufacturing, MSMEs, and rural sectors. Sitharaman referred to the recently approved PM Vikas Bharat Rozgar Yojana, which aims to create 3.5 crore new jobs over the next two years.

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🧮 Inflation and Fiscal Prudence

While defending growth-friendly spending, Sitharaman reiterated the government’s commitment to fiscal discipline. India’s fiscal deficit is expected to fall to 5.1% of GDP in FY26, down from 5.8% in FY25.

She also said inflation is being closely monitored:

“While food inflation remains elevated due to weather disruptions, core inflation has moderated. The government is committed to ensuring price stability without compromising growth.”

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🔍 Outlook for FY26 and Beyond

Most forecasters—including RBI, IMF, and World Bank—have projected India’s growth in the 6.8%–7.2% range for FY26, supported by strong domestic consumption, capex momentum, and a resilient services sector.

Sitharaman expressed confidence that India remains the fastest-growing major economy, with the potential to become a $5 trillion economy by 2027.

Finance Minister Nirmala Sitharaman’s statement reflects the government’s dual approach of fiscal stimulus and structural reforms to maintain economic momentum amid an uncertain global backdrop. With a continued focus on capital investment, job creation, and private sector participation, India aims to ride out short-term volatility and lay the foundation for long-term, inclusive, and sustainable growth.

(Economy India)

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