Speedy rebound in growth on strong foundation: FM Nirmala Sitharaman

India's economy is expected to grow by 6.4 per cent in real terms and by 9.7 per cent in nominal terms, according to advance estimates released by the National Statistics Office

Growth in India is witnessing a speedy rebound on account of a strong economic foundation and the government will take measures to ensure that it remains the fastest-growing economy, Union Finance Minister Nirmala Sitharaman on Tuesday told Parliament.

 

“Only in two of the last 12 quarters has the growth rate touched 5.4 per cent or remained below it … I want to inform the members (of the House) that on account of a strong economic foundation, a speedy rebound is happening,” Sitharaman said in her reply to the “Budget Discussions” in the Lok Sabha.

 

The economy is expected to grow 6.4 per cent in real terms and 9.7 per cent in nominal terms, according to the First Advance Estimates, released by the National Statistics Office.

 

The minister said driven by good rural demand private final consumption expenditure was expected to grow 7.5 per cent in 2024-25 and estimated to be 61.8 per cent of nominal gross domestic product (GDP), the highest since 2002-03.

 

“The world scenario in the last 10 years has turned 180 degrees. The challenges for many countries in making their Budget are far more complicated now than ever before,” the minister said.

 

Stressing global uncertainties such as the continuance of conflicts in West Asia, Russia-Ukraine war, stagnation in global GDP, and sticky inflation in emerging markets, Sitharaman said: “The Budget has sought to address these immediate challenges facing the domestic economy in the global context.”

 

She said the main goals of the Budget were to accelerate growth, secure inclusive development, invigorate private-sector investment, and household sentiment.

 

“We also want to have employment-led development, spurring domestic consumption and boosting manufacturing in India, including export promotion, continuing public capital expenditure, and rekindling animal spirits in the private sector to step up investment,” Sitharaman added.

 

She said effective capital expenditure, including core capital outlay and grants-in-aid for creating capital assets, was projected at ₹15.48 trillion in the Budget Estimates of 2025-26 as against ₹13.18 trillion in the Revised Estimates for FY25. Capex, therefore, is 4.3 per cent of GDP and the fiscal-deficit target is set at 4.4 per cent of GDP for next financial year.

 

“The government is using almost the entire borrowed resources for financing effective capital expenditure. Money is not being denied to any of the capital-expenditure accounts,” Sitharaman said. 

 

The minister highlighted transfers to states had been growing every year and the Budget had provided a statement on the status of “single nodal agency account”, which shows the states had unspent funds of ₹1 trillion as of December 31, 2024, for “Centrally Sponsored Schemes”. 

 

The state government designates a single nodal agency for each scheme and opens its account in a scheduled commercial bank. The model seeks to ensure a just-in-time release of scheme funds to states based on the pace of expenditure.

 

“This brings to the fore the implementation challenges of states, the need for action to remedy at state level,” Sitharaman said. 

 

She added not only the Centre but the states too must look at debt consolidation and also rationalise their debt balances.

 

Sitharaman said inflation received the highest priority of the government and it stayed within the band 2-6 per cent. 

 

“There are very many parameters we keep monitoring, so that food is distributed to people at affordable rates,” she said.

 

On rupee depreciation, the finance minister said global and domestic factors were influencing the value of the rupee against the dollar.

 

The rupee has depreciated 3.3 per cent against the dollar between October and January, but the decline has been lower than in some of its Asian peers.

 

The minister highlighted that all G-10 currencies depreciated during this period by more than 6 per cent with the euro and pound going down 6.7 per cent and 7.2 per cent, respectively.