NEW DELHI: Finance Minister Nirmala Sitharaman on Tuesday said that the Indian economy is seeing a "speedy rebound" from 5. 4 per cent growth clocked in the second quarter of the current fiscal, and the government shall take measures to ensure that India remains the world's fastest-growing economy.
Replying to discussions on the Union Budget for 2025-26 in the Lok Sabha, the finance minister said the Budget has taken various steps to increase liquidity in the hands of people while maintaining fiscal prudence by using 99 per cent of the borrowing in FY'26 to fund capital expenditure.
She also said that inflation management receives the highest priority of this government with retail inflation within the tolerance band of 2-6 per cent. Inflation trend, particularly in food, appears to be moderating, she added.
Speaking about GDP growth, Sitharaman said in the three years prior to 2024-25, the country's GDP growth rate averaged about 8 per cent.
The Indian economy is projected to grow at 6. 4 per cent in the current fiscal -- the lowest pace in four years.
The Finance Ministry's Economic Survey has projected growth in next fiscal FY'26 to be between 6. 3-6. 8 per cent.
Sitharaman said only in two out of 12 quarters, India's growth rate touched 5. 4 or remained below it. The GDP growth in the second quarter (July-September) slowed to 7-quarter low of 5.4 per cent.
"On account of strong economic foundation, a speedy rebound is happening, and we shall take measures which will going forward, help in keeping our economy growing fastest as in the last few years.
We will continue to remain the fastest-growing economy," the minister said.
Sitharaman said the private final consumption expenditure is expected to grow by 7. 3 per cent in the current fiscal driven by a good rural demand.
The private final consumption expenditure is estimated to be 61.8 per cent of the nominal GDP, which is the highest since 2002-03, she added.
Sitharaman said the effective capital expenditure in FY'26 is Rs 15.48 lakh crore, which is 4.3 per cent of GDP.
The Government is targeting a fiscal deficit of Rs 15.68 lakh crore, which is 4.4 per cent of the GDP in FY'26.
Fiscal deficit is the difference between Government revenue and expenditure and the gap is met by market borrowings.
"The government is using almost the entire borrowed resources for financing effective capital expenditure. So the borrowings are not going for revenue expenditure or committed expenditure, or any of those kinds.
It's going only for creating capital assets."
"So, in effect, the government intends to use about 99 per cent of borrowed resources to finance effective capital expenditure in the upcoming year," she said in the Lok Sabha.