Living standards will witness sharpest rise in coming decades: FM Sitharaman | News from business and politics

The coming decades, the minister said, “will witness the steepest rise in living standards for the common man, which will truly make the life of an Indian a defining era.”

“While the IMF forecasts took us 75 years to reach $2,730 per capita income, it will only take five years to add another $2,000.”

“The coming decades will see the steepest rise in living standards for the common man, making it truly a defining era for an Indian,” she said.

She said the Indian government would seek to double the per capita income of its 1.4 billion people (which accounts for 18 percent of the world’s population) within a few years, despite geopolitical challenges threatening global peace.

By 2047, when India crosses the 100-year mark of independence, the new Indian era will have similar core characteristics to developed countries, she said.

Viksit Bharat will bring prosperity not only to Indians but to the rest of the world by becoming the hub of a vibrant exchange of ideas, technology and culture, she added.

Talking about the country’s financial system, she said the soundness and resilience of the Indian banking sector would be underpinned by sustained policy focus on improvements in asset quality, improved provisions for bad loans, sustainable capital adequacy and increasing profitability.

NPA (non-performing assets) ratios are at multi-year lows and banks now have efficient debt recovery mechanisms.

Ensuring that the financial system remains healthy and the cycle lasts longer is another of our key policy priorities, the minister said.

Highlighting the forces that will shape the Indian era, Sitharaman said the country’s young population provides a great base for improvements in total factor productivity, savings and investments.

While the proportion of young people in India is expected to increase over the next two decades, several other developing countries have passed their demographic peak.

This will boost domestic consumption in the coming decade, she said, adding: “Currently, 43 percent of Indians are below 24 years of age and are yet to fully explore their consumption habits.”

“As they become full-fledged consumers, there will be organic consumption growth. At the same time, a growing middle class will pave the way for strong consumption, foreign investment inflows and a dynamic market.”

Furthermore, India’s innovation capabilities will mature and improve in the coming decades, she said.

On fiscal prudence, Sitharaman said the government remains committed to reducing the fiscal deficit.

“Supported by buoyant revenue generation, subdued revenue expenditure growth and healthy economic activity, the fiscal deficit is expected to further decline from 5.6 per cent of GDP in FY24 (provisional actuals) to 4.9 per cent in FY25. Committing to fiscal discipline will not do this.” “We only help keep bond yields under control, but will lead to lower borrowing costs across the economy,” she said.

Talking about the government’s investment plan, the finance minister said the government has planned to increase its infrastructure investment by 17.1 percent to Rs 11.1 million in 2024-2025. This represents 3.4 percent of GDP in FY25.

In addition, a larger share of the budget deficit is now attributable to capital expenditure, indicating increasingly investment-oriented deficit financing.

The fall in commodity prices has facilitated the reduction in the budgeted allocation for fertilizer and fuel subsidies, she said, adding that this has helped curb the growth in revenue expenditure, which is expected to rise 6.2 percent year-on-year.

To ensure policy continuity, the basis for sustainable growth, she said: “Our government has initiated and sustained reforms in infrastructure, banking, trade policy, investment and ease of doing business.”

Ultimately, the four major castes namely ‘Garib’ (poor), ‘Mahilayen’ (women), ‘Yuva’ (youth) and ‘Annadata’ (farmer) will be the biggest stakeholders and beneficiaries of the growth process towards Viksit Bharat. she said.

Accordingly, the budgets in Amrit Kaal would be prepared keeping these stakeholders in mind, she said.

The FY26 budget is expected to be tabled in Parliament on February 1.

First published: Oct 04, 2024 | 4:11 p.m IS