Highlights from Nirmala Sitharaman’s Address in Lok Sabha:
Contents
- Global Macroeconomic Shifts: Union Finance Minister Nirmala Sitharaman addressed the growing challenges in preparing the Union Budget, attributing it to the changing global economic environment. She noted that global uncertainties significantly impacted India’s budgeting process, making it more difficult to navigate.
Budget Figures and Fiscal Strategy:
- Capital Expenditure Focus: The Finance Minister emphasized that the effective capital expenditure for 2025-26 stands at 4.3%, while the fiscal deficit is 4.4% of GDP. This indicates that the government’s borrowing is being directed towards building capital assets and supporting long-term growth.
- Debt Reduction Efforts: FM Sitharaman reiterated the government’s ongoing efforts since 2021 to reduce the national debt and ensure that public funds are used for productive asset-building activities.
Inflation and Economic Management:
- Inflation Control: Sitharaman highlighted the government’s success in managing retail inflation, which remains within the 2%-6% tolerance band. She also noted that food inflation had been addressed, particularly disruptions caused by adverse weather conditions and supply chain issues.
- Unemployment Decline: The Finance Minister shared that the unemployment rate in India has declined from 6% in 2017-18 to 3.2% in 2023-24, underscoring the success of employment-generation measures.
Currency and Global Factors:
- Rupee Movement Influenced by Global Factors: The FM acknowledged the influence of global factors such as the dollar index, interest rates, and crude prices on India’s rupee exchange rate. She also referenced remarks by former RBI Governor Raghuram Rajan, who highlighted the broader issue of the dollar’s strength against multiple global currencies, including the Euro.
Additional Expenditure and Fiscal Impact:
- Interest Payments and Central Schemes: Sitharaman revealed that the net additional expenditure of Rs 2.44 lakh crore would be primarily allocated towards interest payments and funding various central schemes.
- UPA-Era Liabilities: The Finance Minister also targeted the UPA government, noting that the oil, fertilizer, and FCI bonds from the previous regime are being repaid, with Rs 3524 crore earmarked for interest in FY26 and the principal repayment due at Rs 40,464 crore.
Unused Funds in State Accounts:
Unspent Balances in State Accounts: Sitharaman pointed out that Rs 1 lakh crore remains unspent across state accounts for various schemes. She emphasized the need for states to utilize these unspent funds rather than requesting additional allocations.
- Unspent balances include:
- Rs 1395.45 crore in SNA/escrow accounts in states.
- Rs 4636.55 crore allocated for food security.
- Rs 12377 crore for the AMRUT scheme (Urban rejuvenation mission).
- Rs 4351 crore for MGNREGA.
- Unspent balances include:
FM Sitharaman’s address highlighted the ongoing fiscal prudence, with a focus on managing debt, inflation, and unemployment despite global challenges. She called for effective utilization of the funds lying unspent in state accounts and stressed the need for productive expenditure in light of the ongoing economic uncertainties.
