India is poised to witness a significant rise in the living standards of its citizens, driven by government initiatives and efforts to double the nation's per capita income in the coming years, Finance Minister Nirmala Sitharaman announced on Friday. Speaking at the 3rd Kautilya Economic Conclave, Sitharaman highlighted a decline in inequality across India, citing improvements in the Gini coefficient in both urban and rural areas.
“I expect these improvements to continue as the effects of the last decade of economic and structural reforms manifest more thoroughly in the data in the coming years, as the Covid shock fades from the economy,” the Finance Minister said.
Sitharaman noted that the next few decades would see the most significant improvement in living standards for the common man, calling it a "period-defining era" for India. "While it took us 75 years to reach a per capita income of $2,730, it will take just five more years to add another $2,000,” she added, referencing International Monetary Fund (IMF) projections.
Doubling Per Capita Income Amid Geopolitical Challenges
India's government, according to Sitharaman, is committed to doubling the per capita income of its 1.4 billion citizens, despite ongoing geopolitical challenges. By 2047, marking 100 years of India’s independence, she envisions India on par with developed nations in terms of core economic characteristics.
The minister also stressed India's global role, noting that the country’s prosperity under the “Viksit Bharat” vision would contribute to a vibrant exchange of ideas, technology, and culture worldwide.
Strengthening the Financial Sector
Sitharaman underscored the robust health of India’s banking sector, crediting the government’s focus on improving asset quality, increasing provisions for bad loans, and sustaining capital adequacy. She noted that Non-Performing Asset (NPA) ratios are currently at multi-year lows, while debt recovery mechanisms have become more efficient.
“Ensuring that the financial system stays healthy and the cycle lasts longer is one of our core policy priorities,” Sitharaman said.
Demographic Dividend to Drive Growth
India's young population will be a key driver of growth in the coming decades, according to the Finance Minister. She highlighted that 43 per cent of Indians are under the age of 24 and have yet to fully engage in consumption behaviours. This, along with a rising middle class, is expected to boost domestic consumption and attract foreign investment.
As other developing countries face demographic challenges, India’s youthful population offers a competitive edge in terms of productivity, savings, and investment, she noted.
Commitment to Fiscal Discipline and Infrastructure Investment
Reaffirming the government's commitment to fiscal prudence, Sitharaman stated that the fiscal deficit is expected to decline from 5.6 per cent of GDP in FY24 to 4.9 per cent in FY25. She attributed this to buoyant revenue generation, restrained growth in revenue expenditure, and a healthy economic outlook.
The government has also planned a 17.1 per cent increase in infrastructure investment, budgeting Rs 11.1 lakh crore for FY25, which represents 3.4 per cent of GDP. A greater share of the fiscal deficit is now being directed towards capital outlays, underscoring a shift toward investment-oriented deficit financing.
Amrit Kaal and Viksit Bharat
Sitharaman highlighted that the government’s reforms across infrastructure, banking, trade, and ease of doing business will continue to shape India’s growth in the "Amrit Kaal" phase. The budgets of this period will prioritize the key stakeholders in India’s growth — namely the poor, women, youth, and farmers.