Lok Sabha Question No. 202 (UNSTARRED), answered on 2025-07-21
Subject: Measures to Sustain Economic Growth
Ministry: FINANCE
Asked by: Shri Rajmohan Unnithan

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF ECONOMIC AFFAIRS

## LOK SABHA UNSTARRED QUESTION No. 202

TO BE ANSWERED ON 21 JULY 2025/ASHADHA 30, 1947 (SAKA)

## MEASURES TO SUSTAIN ECONOMIC GROWTH

## 202. Shri Rajmohan Unnithan:

Will the Minister of FINANCE be pleased to state:

- (a) the measures planned to sustain economic growth in the light of global challenges;
- (b) whether the revised fiscal deficit targets being considered for the fiscal year 2025-26; and
- (c) the financial support intended for States to enhance their resilience projects?

## ANSWER

## MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI PANKAJ CHAUDHARY)

(a): The government has been taking various measures to boost economic growth in light of global  challenges  and  uncertainties.  India's  economic  resilience  is  underpinned  by  strong macroeconomic fundamentals such as steady growth, price stability, credible fiscal consolidation,  resilient  external  sector  performance,  robust  foreign  exchange  reserves,  a strong  and  well-capitalised  banking  sector,  and  robust  physical  and  digital  infrastructure. Additionally, India's well-regulated financial system, credible inflation-targeting regime, and flexible exchange rate contribute to the economy's resilience to shocks. In response to recent global challenges such as trade tensions, uncertain capital flows, and geopolitical risks, the government  has  been  taking  a  multi-pronged  approach  to  sustain  economic  growth.  These measures include, inter-alia ,

-  Various  export  facilitation  measures  including  adoption  of  a  new  Foreign  Trade Policy (2023) to integrate India more effectively into the global market, enhance its trade competitiveness, and establish the country as a reliable and trusted trade partner in an increasingly complex global environment;
-  bilaterally engaging with countries for the finalisation of various Trade Agreements;
-  liberalisation of FDI policy to attract foreign capital;
-  continued efforts to simplify compliances, promote digital governance, and decriminalizing legal provisions to attract domestic and foreign investment;
-  strengthening  local  manufacturing  which  exhibits  higher  forward  and  backward linkages with other sectors of the economy; and
-  credit guarantee schemes, emergency liquidity lines and increased public expenditures, particularly capex and welfare measures to enhance resilience to shocks as well as to protect the vulnerable groups in such events.

(b):    The  estimate  of  fiscal  deficit  for  the  year  2025-26,  as  presented  in  the  Union  Budget 2025-26 is at 4.4 per cent. There is no felt requirement for revision of fiscal deficit target at this stage, and neither is it considered appropriate.

(c):  The  Government  provides  multifaceted  financial  support  to  states  to  enhance  their resilience  through  various  measures  such  as  centrally  sponsored  schemes,  central  sector schemes,  finance  commission  grants  (including  grants  for  local  bodies,  health  sector, incubation of new cities, shared municipal services, grants-in-aid for State Disaster Response Fund (SDRF), grants-in-aid for State Disaster Mitigation Fund),  and other forms of  grants and  assistance  to  states.  A  key  instrument  is  the  Special  Assistance  to  States  for  Capital Expenditure,  under  which  interest-free  loans  are  extended  to  states  for  capital  expenditure and incentivising  reforms.  In  the  Union  Budget  2025-26,  an  outlay  of ₹ 1.5  lakh  crore  has been proposed in this regard. To strengthen power sector resilience, the Budget also proposed incentives  for  electricity  distribution  reforms  and  augmentation  of  intra-state  transmission capacity,  with  an  additional  borrowing  of  0.5  per  cent  of  gross  state  domestic  product (GSDP) allowed for states,  contingent  on  undertaking  these  reforms. Moreover, the  Budget also  proposed  to  launch  a  comprehensive  multi-sectoral  'Rural  Prosperity  and  Resilience' programme in partnership with states, which aims to address under-employment in agriculture.