Political stability, policy consistency needed to ensure Indian economy’s growth to world’s third-largest: FM

Ms. Sitharaman pushes back against critics who are treating India’s growth as a ‘fait accompli’, with or without government intervention; notes that global volatility is worse than a decade ago

October 05, 2023 09:40 pm | Updated 09:40 pm IST - NEW DELHI

Union Finance Minister Nirmala Sitharaman. File

Union Finance Minister Nirmala Sitharaman. File | Photo Credit: S. Siva Saravanan

Taking on critics who argue that India will become the world’s third largest economy in a few years with or without government intervention, Finance Minister Nirmala Sitharaman said that political stability and policy consistency was essential for the prospect to turn into a reality, especially in a world marred by unprecedented volatility.

Claiming that the government was not keen on taking credit, Ms. Sitharaman said that those treating the Indian economy’s growth from the world’s tenth-largest to the fifth-largest and beyond as a ‘fait accompli’ were not being fair to India’s farmers, entrepreneurs, and the “struggling, weaker economic sections” whose efforts and aspirations have lifted the country.

“From the 10th position in 2013-14, we’ve become the fifth-largest economy, and in the next few years [will] become the third largest... There is no way in which I will accept if anyone says, ‘Oh, it’s guaranteed that we will move from five to three in the next few years and you don’t need a Prime Minister to say I’ll make sure that this country will move to the third rank’. I think that is losing perspective of what it takes to move upwards for better prospects of our citizens,” the Minister said.

Global volatility

Noting that the global environment had faced fewer pressures ten years ago, while today’s situation is marked by complete volatility and disruptions in global supply chains as well as in supplies of food, fuel, and fertilisers, Ms. Sitharaman said: “If that’s the situation, what is guaranteed, pray? And there was a time when India probably was somewhere in 10th position, but it fell back. So going upwards is not a guarantee, but maybe going downwards, high risk.”

Addressing students of the Shri Ram College of Commerce in Delhi, the Finance Minister said that if any sort of guarantee could be provided, it would stem from political stability and policy consistency. “One government to another or one tenure to another, you have a flip-flop, it affects your economic performance, your macro-economic stability will certainly be hindered. You need political stability, you need continuity, you need decisive political decision-making,” she explained.

Regional differences

“Industry’s concern has always been, ‘Give us stability and policy consistency, otherwise they cannot be economic activity, which can be consistently growing upwards’. You will only be firefighting, if the government policy is continuously being up and down, or seesaw-like unpredictable. If decisiveness is not there, and you’re compromising, because of a coalition in politics or you have other interests, or you are thinking that in this region, if this happens, that region I cannot cater, and therefore making India appear as though some regions are blessed and some others aren’t,” she added.

“I don’t want to name any one region of India, but some regions in this country constantly are trapped with vested interest decision-making. So you need governments which are going to be able to look futuristically, be ready for reforms, be sure that they have to provide consistency for businesses to grow. And that’s exactly what makes the difference between the kind of decision-making that we have taken and the kind of decision-making which did not happen some time ago, pulling the country backwards,” Ms. Sitharaman underlined.

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