The Finance Minister anchored her address in one of its central lines, “kosha-purvah sarva-arambhah”: all undertakings depend first on the treasury. The lesson, she said, is that a state which guards its finances in calm years keeps the freedom to act when conditions turn.
FM On Dealing With Global Conflicts
Its evidence, she argued, lies largely in the counterfactual: the inflation spiral that did not take hold, the queues that did not form at fuel outlets, the banking stress that did not surface and the fiscal correction that was never forced. These outcomes, she said, deserve as much attention from economists as the headline growth rate.
The shocks of the last four years, she noted, have come in two broad kinds. Older vulnerabilities have returned in sharper form: crude price spikes amid recurring instability in West Asia, tighter US monetary conditions pulling on global capital flows, and rising trade barriers. The conflicts involving Russia, Ukraine and Iran, along with the disruption around the Strait of Hormuz, added something new: a threat to the physical movement of oil and gas as well as to their prices.
Where Does the India Story Stand?
A price shock, she observed, can be cushioned with monetary and fiscal tools, but a quantity shock tests buffer stocks and delivery systems, and therefore the capacity of the state itself. All of this has arrived in a world with thinner buffers.
Citing the IMF Fiscal Monitor of April 2026, she pointed out that global public debt rose to nearly 94% of GDP in 2025 and is projected to reach 100% by 2029, a level previously seen only after the Second World War.
Against this backdrop, she said, India has come through with its fundamentals intact and strengthening. Real GDP grew 7.8% in the first quarter of FY27, CPI inflation was 4.82% in August 2026, and the current account deficit was 0.5% of GDP in the quarter. Banks’ gross NPAs are at multi-decadal lows, and foreign exchange reserves stand at about $766 billion.
Six Pillars of Performance Amid Turmoil
The Finance Minister attributed this performance to six foundations. The first is efficient last-mile delivery.
The Jan Dhan–Aadhaar–Mobile trinity and Direct Benefit Transfer have strengthened the systems that carry assistance directly to beneficiaries, while schemes such as PM Awas Yojana, Swachh Bharat, Ujjwala, Ayushman Bharat and PM Garib Kalyan Anna Yojana address different sources of household vulnerability. By easing these pressures, she said, they give people more scope to pursue education, livelihoods and enterprise.
The second foundation is the capacity to turn opportunity into productive activity, chiefly through access to finance. PM MUDRA Yojana has sanctioned over 52 crore collateral-free loans, and PM SVANidhi supports street vendors.
Tough banking reforms, including recapitalisation, resolution of stressed assets and stronger governance, have underpinned a financial system in which non-food credit grew 18.8% in the year to August 2026. The Emergency Credit Line Guarantee Scheme, she added, helped enterprises meet working-capital needs and preserve jobs during periods of disruption.
Infrastructure is the third. The FY27 Budget provides ₹12.22 lakh crore in capital expenditure, nearly matching in nominal terms the ₹12.39 lakh crore the Centre spent across the entire decade from FY2004–05 to FY2013–14. Including grants for creating capital assets, effective capital expenditure reaches ₹17.15 lakh crore, or 4.4% of GDP.
The results, she said, are visible: national highways have expanded by about 61%, operational airports have more than doubled, cargo-handling capacity at major ports is up nearly 60%, and Indian Railways commissioned 36,429 km of new track between 2014 and 2026. PM GatiShakti has coordinated planning across projects, while SASCI’s 50-year interest-free loans have supported and incentivised reforms by States.
The fourth foundation is a sustained reform mindset, which she described as a matter of conviction rather than compulsion under Prime Minister Modi. GST, the Insolvency and Bankruptcy Code, the four Labour Codes and the Jan Vishwas Acts have aimed to make economic activity simpler, more predictable and more productive.
The fifth is economic stability, supported by the flexible inflation targeting framework introduced in 2016, continuous monitoring of prices, stocks and crop conditions, and buffers financed through the Price Stabilisation Fund.
MSP increases, PM-KISAN and calibrated trade measures balance farmers’ livelihoods with household purchasing power, and household LPG and piped gas requirements were adequately met during the Hormuz disruption.
The sixth, she said, sustains all the others: fiscal prudence.
When a shock constrains supply, stimulus beyond productive capacity can feed inflation and leave debt that outlasts the disruption. India’s approach has been calibrated support alongside a credible path of consolidation. The fiscal deficit is budgeted at 4.3% of GDP in FY27, and the IMF projects India’s general government debt to fall from 83.4% of GDP in 2026 to 77.7% in 2031, against a rising global trend.
Moving Forward
Looking ahead, the Finance Minister described uncertainty as a standing condition of the global economy, with resilience something to be built continuously rather than once. She named four priorities.
The first is structural autonomy in strategic inputs. Supply chains optimised for cost alone carry hidden fragility, and India has responded with the National Critical Mineral Mission, the Rare Earth Corridors and the India Semiconductor Mission 2.0, while also looking at small modular reactors.
The second is global openness. Economic relationships, she argued, should remain open, predictable and rules-based, with nations resolving differences through dialogue and negotiated agreements rather than letting them become barriers to trade and investment.
She also called for a global financial architecture that reflects where growth now lies, with the work on strengthening multilateral development banks under India’s G20 Presidency translating into larger, faster and more predictable long-term finance for developing economies.
The third is skills. With AI and frontier technologies reshaping workplaces, she said young entrants and existing workers alike must be able to upgrade their skills and move into emerging roles.
Industry should take a greater part in designing and delivering training, through partnerships with educational institutions, apprenticeships and workplace learning, combining digital and AI competencies with professional knowledge and judgement. Continuous learning, she added, must be accessible throughout a working life.
The fourth is that private investment must now lead the cycle, including in research and innovation. India spends 0.83% of GDP on R&D against 2.7% for the OECD, and the private sector accounts for only 36% of that spending. The ₹1 lakh crore (about $11 billion) Research, Development and Innovation Scheme is meant to shift this balance, as India moves from “Made in India” to “Imagined and Made in India.”
In a modern economy, she added, Kautilya’s treasury includes fiscal space, buffer stocks, sound banks and the trust of citizens, and India will keep strengthening each of them as it works towards Viksit Bharat by 2047, meeting the age of flux with preparation and confidence.