Global Economy

Broader & lasting growth, jobs top FM Nirmala Sitharaman's to-do list

New Delhi: Nirmala Sitharaman, in her second term as finance minister, hit the ground running on Monday. Instead of one, she released two tax devolution instalments – totalling ₹1,39,751 crore – to 28 states, for bolstering their development and capital spending. The minister earlier reviewed the economic and fiscal situation of states with finance secretary TV Somanathan and economic affairs secretary Ajay Seth, soon after the first meeting of the newly formed Cabinet on Monday evening. The interim budget for FY25 earmarked ₹12.20 lakh crore toward the devolution of taxes. With this release, the total devolved so far this fiscal year stands at ₹2,79,500 crore. Sitharaman returns to North Block amid a broad focus on continuity by the NDA government. Her immediate task is the full budget for FY25.

Also Corporate Affairs Minister
The budget, likely early next month, is expected to detail the Narendra Modi government’s vision for the next five years. It will also be keenly watched for the next-generation reforms the finance minister promised in the interim budget of February.

The main focus areas for Sitharaman will be sustaining high growth, making it more inclusive and creating employment. Rationalising GST is expected to be high on the agenda, as will be easing tax compliances.
India clocked 8.2% expansion in FY24, underscoring its status as the world’s fastest-growing major economy. The focus will now be on catapulting the country to a higher growth trajectory, in line with the Viksit Bharat (developed India) vision, but with increased attention to jobs creation and lifting private investment.

Sitharaman presented a vote on account in February without any pre-poll largesse, targeting a fiscal deficit of 5.1% of GDP in FY25. She will need to balance fiscal pressures in the new coalition government and a growing chorus for cash transfers to alleviate rural distress – in the wake of such pledges by opposition parties.

The BJP-led NDA won 293 seats in the 543-seat lower house of Parliament. The BJP secured 240 seats on its own, falling short of the majority 272 mark.

Sitharaman, a Rajya Sabha member from Karnataka, has held key portfolios in the Modi governments, serving as defence minister as well as minister for commerce and industry with independent charge.

She will also hold the corporate affairs ministry, according to a statement from the President’s office on Monday.

During her first stint at the finance ministry, Sitharaman, 64, steered the economy through the Covid-19 pandemic, rolling out the Aatmanirbhar (self-reliant) Bharat package and measures such as production-linked incentive schemes for several sectors, without losing sight of fiscal prudence. Stepping up capital spending to support the economy until private investment gained pace aided in the sharp economic recovery.


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