FM Sitharaman Flags State Debt Risks, Pushes Manufacturing Focus
“The RBI documents and studies show worrisome debt-to-GDP in some states (unnamed here or in Parliament). Unless managed within fiscal responsibility and budget management (FRBM) limits and high-interest debt reduced, states borrow to service loans, not development, a poor fiscal play. This threatens the 10-year momentum for Viksit Bharat by 2047”: Nirmala Sitharaman
NEW DELHI: Flagging concern over fiscal stress in some Indian states, Union finance minister Nirmala Sitharaman on Wednesday called for sharper focus on manufacturing, innovation and strategic trade positioning in the country. “India’s growth momentum and global aspirations hinge on disciplined fiscal management, competitive manufacturing, and confident policymaking rooted in domestic priorities. The government has set clear goals for transparency in fiscal management and brought down its debt levels, and called upon states to implement the same,” she said at an event here.
“From the next financial year, debt levels will be the core focus area for the Centre, along with fiscal deficit, and nudged states to lower their debt levels so that the country can achieve its goal of becoming a developed nation by 2047. India’s debt-to-GDP shot up to 61.4 per cent post Covid, but policies adopted by the central government helped bring it down to 57.1 per cent by 2023-24. The government expects it to reduce to 56.1 per cent this year,” she said.
The finance minister also called upon states to take up accountability and transparency in fiscal management as a priority just like the Centre, which has every year reduced the debt levels. “The RBI documents and studies show worrisome debt-to-GDP in some states (unnamed here or in Parliament). Unless managed within fiscal responsibility and budget management (FRBM) limits and high-interest debt reduced, states borrow to service loans, not development, a poor fiscal play. This threatens the 10-year momentum for Viksit Bharat by 2047,” she said.
On trade and global economic engagement, the finance minister also said that India must chart its own course amid shifting global norms. “It is important for us to understand that trade is no longer what we used to talk about in global trade norms. Countries like India with aspirations must mark their own goalposts by chalking their own growth story,” she said, adding that such an approach builds confidence to meet future challenges.
Pushed back against criticism of India’s tariff policies, Sitharaman also said that globally, trade isn't fair or free. “India faces lectures on being inward-looking or a ‘tariff king,’ but tariffs are weaponised --India safeguards against dumping, yet others face no criticism. This reality requires India to negotiate cautiously while leveraging its growing economic strength,” she said.
Outlining India’s long-term ambition, she also said, “We can aspire to an India that contributes 25 per cent to world trade and 25 per cent of global trade emanated from India. Achieving this would require reviving manufacturing and agriculture, strengthening value addition, and sustaining services growth across sectors including tourism and hospitality,” she added.