New Delhi: India will witness the steepest rise in living standards of the common man on the back of the government’s initiatives and the efforts towards doubling per capita income in few years, Finance Minister Nirmala Sitharaman said on Friday.
Addressing the 3rd edition of the Kautilya Economic Conclave, the minister stressed that inequality in India has declined with the Gini coefficient, a statistical tool to measure inequity, showing improvement in urban as well as rural areas.
“I expect these improvements to continue as the effects of the last ten years of economic and structural reforms manifest more thoroughly in the data in the coming years as the Covid shock fades from the economy,” Sitharaman said.
The upcoming decades, the minister said, “will see the steepest rise in living standards for the common man, truly making it a period-defining era for an Indian to live in”.
“While it took us 75 years to reach a per capita income of USD 2,730, as per IMF projections, it will take only five years to add another USD 2,000.
“The upcoming decades will see the steepest rise in living standards for the common man, truly making it a period-defining era for an Indian to live in,” she said.
The Indian government, she said, will try to double the per capita income in a matter of a few years for its 1.4 billion strong population (which makes up 18 per cent of the global total) notwithstanding the geopolitical challenges threatening world peace.
By 2047, as India crosses the 100-year mark of independence, she said, the new Indian era will have core characteristics similar to developed countries.
Viksit Bharat will usher prosperity not just to Indians but to the rest of the world by becoming central to a vibrant exchange of ideas, technology, and culture, she added.
Speaking on the country’s financial system, she said the soundness and resilience of India’s banking sector have been underpinned by a sustained policy focus on asset quality improvements, enhanced provisioning for bad loans, sustained capital adequacy, and a rise in profitability.
NPA (non-performing asset) ratios are at a multi-year low, and banks now have efficient debt recovery mechanisms.
Ensuring that the financial system stays healthy and the cycle lasts longer is another of our core policy priorities, the minister said.
Highlighting the forces that will shape the Indian era, Sitharaman said, the country’s youthful population provides a large base for total factor productivity improvements, savings, and investment.
While India’s share of the young is set to rise over the next two decades, several other developing economies are past their demographic peak.
This will drive domestic consumption in the coming decade, she said, adding, “as of now, 43 per cent of Indians are younger than 24 years old, and they have yet to explore their consumption behaviour fully.
“There will be organic growth in consumption as they become full-fledged consumers. Simultaneously, a rising middle class will pave the way for strong consumption, inflow of foreign investment and a vibrant marketplace.”
Besides, she said, India’s innovation ability will mature and improve over the coming decades.
With regard to fiscal prudence, Sitharaman said, the government continues to uphold its commitment to reducing the fiscal deficit.
“Aided by buoyant revenue generation, restrained revenue expenditure growth and healthy economic activity, the fiscal deficit is estimated to decline further from 5.6 per cent of GDP in FY24 (provisional actuals) to 4.9 per cent in FY25. The commitment to fiscal discipline will not only help keep bond yields in check but will translate to lower economy-wide borrowing costs,” she said.
Talking about the capex plan of the government, the finance minister said, the government has budgeted to increase its infrastructure investment by 17.1 per cent to Rs 11.1 lakh crore in 2024-25. This amounts to 3.4 per cent of GDP in FY25.
Additionally, she said, a larger proportion of fiscal deficit is now accounted for by capital outlays, indicating an increasingly investment-oriented deficit financing.
The decline in commodity prices has facilitated the lowering of the budgeted allocation for subsidies on fertiliser and fuel, she said, adding, this has contributed to restraining the growth in revenue expenditure, which is estimated to increase by 6.2 per cent year on year.
To ensure policy continuity, the bedrock of sustained growth, she said, “our government has initiated and sustained reforms across infrastructure, banking, trade policy, investment, and ease of doing business”.
Ultimately, the largest stakeholders and beneficiaries of the growth process towards Viksit Bharat will be the four major castes, namely ‘Garib’ (Poor), ‘Mahilayen’ (Women), ‘Yuva’ (Youth) and ‘Annadata’ (Farmer), she said.
Accordingly, the budgets in Amrit Kaal will be devised with these stakeholders in mind, she said.
Budget for FY26 is likely to be tabled in Parliament on February 1.
