Finance Minister Nirmala Sitharaman said that strong fiscal discipline has given India enough flexibility to increase capital expenditure, support sectors affected by the West Asia crisis, and allow the Reserve Bank of India to consider further rate cuts. She explained that sound public finance helps a country handle economic downturns better. While many nations with high debt struggle to act, India has enough fiscal space due to years of careful planning. This has enabled the government to cut fuel taxes and provide targeted relief to key sectors.

Observing that the current year is even more challenging than the previous one, she said ‘the escalation of Middle East conflict has evolved from a regional security concern into a systemic tremor threatening the vital arteries of global energy, and hardening the lines of a new, multipolar world order.’ Recalling various global events that shadowed 2025, she said the year was monumental in more ways than policymakers initially thought. She added ‘Trade fragmentation has introduced severe uncertainty into global supply chains. This led to sharp downward revisions in global growth forecasts, but the year ended more optimistically than previously perceived, particularly for India’.

Talking about India debt-to-GDP ratio, she said the country stands out as general government debt-to-GDP ratio (which includes States’ debt), at around 81 per cent, is the lowest among major economies after Germany. More importantly, she said India is the only major economy where the IMF projects this ratio to fall significantly - to 75.8 per cent by 2030 - while the debt outlook for the advanced economies such as US, China, Germany, and others is projected to worsen. She added ‘Our external debt-to-GDP ratio stands at just 19.1 per cent (as of September 2025) - one of the lowest in the emerging market world. India’s foreign exchange reserves, at over $688 billion (as of March 31, 2026), provide import cover of approximately 11 months - a substantial buffer’.

Recalling India’s ‘Fragile Five’ economy tag over a decade ago, she said India is now the fastest-growing major economy in the world. She said ‘We began with a fiscal deficit on an unsustainable trajectory. We have brought it to 4.4 per cent of GDP, en route toward 50 per cent debt-to-GDP by 2030-31. We began with a tax system built on suspicion. We have created one premised on trust’. She added the road to Viksit Bharat 2047 is long, and the challenges ahead - climate finance, subnational fiscal reform, debt management, the fiscal implications of demographic change, the public investment return challenge, technology-led disruptions - are formidable.