Daijiworld Media Network - New Delhi
New Delhi, Oct 3: Despite global uncertainty triggered by the West Asia crisis, India has successfully navigated the turbulence while its economic fundamentals remain intact and have strengthened, Finance Minister Nirmala Sitharaman said on Saturday.
Addressing a special plenary on “Resilience in an Age of Flux: India’s Economic Priorities” at the 5th Kautilya Economic Conclave (KEC 2026) here, Sitharaman said India had come through the period “remarkably well with its fundamentals intact and strengthened”.
The Finance Minister noted that global public debt had risen to nearly 94 per cent of GDP in 2025 and was projected to reach 100 per cent by 2029, a level last seen in the aftermath of the Second World War.
“A price shock can be cushioned with monetary and fiscal tools. But a quantity shock tests macroeconomic systems, the reach of delivery systems, and therefore the capacity of the state itself. These shocks have arrived in a world with even thinner buffers,” she said.
Sitharaman said India's real GDP grew 7.8 per cent in the first quarter of FY 2026-27, while CPI inflation stood at about 4.8 per cent in August 2026. The current account deficit was 0.5 per cent of GDP in the first quarter of FY27, she added.
She said that since 2014, the government had worked to strengthen the capacities required for sustained development, including the state's ability to respond, the economy's capacity to produce, and the ability of citizens and enterprises to participate in growth.
“The first foundation is strengthening resilience at the household level. This has been done by translating public expenditure and government initiatives into tangible improvements in people’s lives. The use of transparent mechanisms, strict monitoring, and a zeal to deliver ensured that government schemes reached the ground,” Sitharaman said.
The Jan Dhan-Aadhaar-Mobile trinity and Direct Benefit Transfer (DBT) strengthened systems for delivering assistance directly to beneficiaries, she said.
Timely implementation of schemes ensured that housing under the PM Awas Yojana, sanitation under Swachh Bharat, clean cooking gas under Ujjwala, healthcare under Ayushman Bharat and food security under the PM Garib Kalyan Anna Yojana addressed different sources of household vulnerability, she added.
“The second foundation is the capacity to turn economic opportunity into productive activity. Access to finance has been central to this effort. The PM MUDRA Yojana has sanctioned over 52 crore collateral-free loans, supporting self-employment and small enterprises,” the Finance Minister said.
She said PM SVANidhi had supported street vendors, while formalisation of the economy was helping increase credit uptake.
The government had also undertaken a series of banking-sector reforms, including recapitalisation and resolution of stressed assets, along with stronger governance and risk-management frameworks, Sitharaman said.
Non-food credit grew 18.8 per cent in the year to August 2026, sustaining the flow of finance to economic activity, she said.
A stronger banking sector was also helping enterprises facing external uncertainties, while working capital and access to markets remained critical, Sitharaman added.
She said the Emergency Credit Line Guarantee Scheme helped meet working-capital requirements, sustain operations and employment, and withstand liquidity pressures during periods of disruption.
“The third foundation is the infrastructure that connects people, factories, and markets. Its scale determines how efficiently goods move, how widely businesses can operate, and how fully different regions can participate in the economy,” she said.
In FY 2026-27 alone, the government had budgeted Rs 12.22 lakh crore in capital expenditure, nearly matching in nominal terms the Rs 12.39 lakh crore spent by the Centre over the entire decade from 2004-05 to 2013-14, including grants for the creation of capital assets, Sitharaman said.
Effective capital expenditure stands at Rs 17.15 lakh crore, or 4.4 per cent of GDP.
“The cumulative results of sustained investments since 2014 are visible: national highways have expanded by about 61%, operational railway routes have more than doubled, and cargo-handling capacity at major ports has increased by 60 per cent,” she said.
Sitharaman said the fourth foundation was leadership with a strong reform mindset. Prime Minister Narendra Modi, she said, approached reforms as a matter of conviction rather than compulsion.
“The Union government has advanced national frameworks through the GST, the Insolvency and Bankruptcy Code, the four Labour Codes, and the Jan Vishwas Acts,” she said.
On banking, Sitharaman reiterated that the government had undertaken reforms covering recapitalisation, resolution of stressed assets and stronger governance and risk-management frameworks.
The banking sector was now helping enterprises navigate external uncertainty, although working capital and access to markets remained critical, she said.
Sitharaman also said operational airports had more than doubled, while cargo-handling capacity at major ports had increased by nearly 60 per cent.
She credited the government's reform record, including the Goods and Services Tax (GST), Insolvency and Bankruptcy Code (IBC), Labour Codes and Jan Vishwas measures, for strengthening the foundations of India's economy.