Sitharaman says government capex, fiscal prudence to remain key to sustaining growth

The government will continue to prioritise capital expenditure to sustain India's growth momentum while ensuring fiscal discipline, Union Finance Minister Nirmala Sitharaman said on Monday, stressing that public spending must remain responsible even as the government supports economic expansion and welfare programmes.

The government will continue to prioritise capital expenditure to sustain India's growth momentum while ensuring fiscal discipline, Union Finance Minister Nirmala Sitharaman said on Monday, stressing that public spending must remain responsible even as the government supports economic expansion and welfare programmes. Speaking at HSBC India's Third Annual Financial Inclusion Gathering, in a conversation with Hitendra Dave, CEO of HSBC India, Sitharaman said capital expenditure had delivered good results over the past four to five years through its multiplier effect and would remain an important part of the government's growth strategy.

"Capex is a very important component of our growth strategy because till such a time the private sector is also going to come in to expand capacities or establish newer capacities. It's important for the government to push through with the capital expenditure," she said. She added that the government would continue investing to ensure that India's growth momentum was not lost, while keeping a close watch on the fiscal deficit.

"We need to be fiscally prudent. Otherwise, it is not a gains thing," Sitharaman said, adding that expenditure must be undertaken responsibly. "Under Prime Minister Modi, fiscal prudence will be top priority," she said. Addressing the balance between welfare commitments and fiscal consolidation, the Finance Minister highlighted the role of government schemes in improving access to basic services, including food security, housing, sanitation, drinking water and healthcare insurance.

She cited a World Bank report which showed that India's poverty level had declined to 2 per cent by the end of financial year 2023 from around 25 per cent. She attributed the improvement to welfare delivery, financial inclusion and access to essential services. Sitharaman also identified credit access, insurance and pensions as priorities for the next phase of financial inclusion. She reiterated the government's goal of achieving insurance coverage for all by 2047 and said credit access was important for people seeking to start or expand businesses.

On employment and skills, she said the government wanted every district to have AI training-capable centres to prepare young people for AI-enabled jobs and address the gap between industry requirements and the skills of graduates. She also referred to a recently announced high-level committee that will consult industry and experts and recommend what India's banking system needs to support the Viksit Bharat vision.

The Finance Minister said the government would have to remain fiscally prudent while finding creative ways to encourage growth and sustain public expenditure. (ANI)