Minister of Finance Nirmala Sitharaman on Monday said the world has moved from an era of episodic \u201cshocks\u201d to one of \u201cpermanent volatility\u201d, warning that the escalating West Asian conflict now acts as a \u201csystemic tremor\u201d threatening global energy flows. Delivering the keynote address at the National Institute of Public Finance and Policy (NIPFP) in New Delhi, she said 2026 had already proven more \u201cchallenging\u201d than the year before. \u201cThe escalation of the Middle East conflict has evolved from a regional security concern into a systemic tremor, threatening the vital arteries of global energy and hardening the lines of a new, multipolar world order,\u201d she said.<\/p>\n
The debt situation<\/p>\n
Invoking the VUCA framework\u2014volatility, uncertainty, complexity, and ambiguity\u2014Sitharaman said a term coined to describe the post-Cold War world had found its \u201ctruest and most unsettling relevance\u201d in the present decade. She warned that decades of reckless global spending are finally causing a financial crisis for advanced economies. Global public debt has surged to about $106 trillion, exceeding 95 percent of global GDP. The US carries a debt-to-GDP ratio of 125 percent, while Japan\u2019s stands at 235 percent.<\/p>\n
Many advanced economies that spent decades running expansionary fiscal policies now find themselves with severely constrained policy space, exactly at the moment they need it the most. They face, she said, \u201ca grim choice between austerity and instability.\u201d<\/p>\n
Against this turbulent global backdrop, Sitharaman made the case for India\u2019s economic exceptionalism, pointing to a set of fiscal indicators she described as the product of \u201cdeliberate, sustained, and sometimes politically difficult choices\u201d. \u201cOn the contrary, India has fiscal space, room to maintain our capex programme, room for the RBI to cut rates, room to offer targeted support to affected sectors. This is the dividend of a decade of fiscal discipline,\u201d she said.<\/p>\n
India\u2019s general government debt-to-GDP ratio stands at about 81 percent, the lowest among major economies after Germany, and the IMF projects it will fall further to 75.8 percent by 2030, even as debt trajectories for the US, China, and other advanced economies are expected to worsen. She also highlighted India\u2019s external debt-to-GDP ratio of 19.1 percent (as of September) and foreign exchange reserves of over $688 billion as of March 31, 2026, providing roughly 11 months of import cover.<\/p>\n
Read More<\/p>\n
A decade ago, India was counted among the so-called \u201cFragile Five\u201d\u2014economies most vulnerable to external shocks, she said. But today, India is counted as the fastest-growing major economy in the world. The fiscal deficit has been brought down to 4.4 percent of GDP, with the government now targeting a debt-to-GDP ratio of 50 percent by 2030-31. Good public finance, she said, strengthens the counter-cyclical muscle of the state. \u201cA good public finance policy improves the counter-cyclical capacity of fiscal policy, especially the ability to \u201clean against the wind\u201d in economic downturn,\u201d she added.<\/p>\n","protected":false},"excerpt":{"rendered":"Minister of Finance Nirmala Sitharaman on Monday said the world has moved from an era of episodic \u201cshocks\u201d…\n","protected":false},"author":2,"featured_media":386140,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[72,113,171759,171754,61,171757,171758,171752,60,171756,171753,171755],"class_list":{"0":"post-386139","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-business","9":"tag-economy","10":"tag-fiscal-deficit-reduction-india","11":"tag-global-public-debt-crisis","12":"tag-ie","13":"tag-india-debt-to-gdp","14":"tag-india-economic-exceptionalism","15":"tag-india-fiscal-discipline","16":"tag-ireland","17":"tag-middle-east-conflict-energy","18":"tag-nirmala-sitharaman-speech","19":"tag-permanent-volatility-economy"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/386139","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/comments?post=386139"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/386139\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media\/386140"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media?parent=386139"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/categories?post=386139"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/tags?post=386139"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}