India's Finance Minister Nirmala Sitharaman highlighted the government's priority to reduce national debt and focus on borrowing exclusively for asset creation over the next decade. Speaking at the Confederation of Indian Industry's (CII) Global Economic Policy Forum, she underscored the importance of responsible debt management and announced plans for a new debt management approach starting FY27.

Transitioning to Responsible Borrowing

Ahead of the upcoming Union Budget for FY26, Sitharaman remarked on the need to shift from focusing solely on fiscal deficits to a broader debt management strategy. She acknowledged the significant borrowing during the COVID-19 pandemic but emphasized the need to avoid burdening future generations with unsustainable debt.

"Debt is necessary, but borrowing in the coming decade must aim at asset creation without leaving a heavy debt burden for the future," she said. Sitharaman also warned that mismanaged debt could lead to increased taxation to repay borrowings, transferring the burden to future generations.

A Call for Collaborative Debt Management

The minister called for collective efforts from the government and industry to effectively manage debt and ensure that borrowing serves productive purposes. She noted that rising intergenerational debt across nations ultimately impacts taxpayers, urging alignment between business interests and national priorities.

Global Economic Challenges and Opportunities

This year’s CII forum theme, “Decadal Priorities for the Global Economy,” provided a platform for Sitharaman to discuss pressing economic challenges. She urged industries to reassess and adapt strategies based on lessons from the past decade. Highlighting the risks posed by concentrated supply chains, she advocated for greater diversification to mitigate the impact of geopolitical events.

On climate change, Sitharaman emphasized the need for a commitment comparable to poverty eradication efforts. She highlighted the challenge of mobilizing resources to address climate risks, which go beyond reducing emissions to include safeguarding livelihoods and assets from climate volatility.

Focus on Agricultural Innovation

Sitharaman identified technology and innovation as crucial to addressing global food security challenges. She pointed to India's success in creating digital public infrastructure and announced plans for “Agriculture Stack,” a major innovation to enhance agricultural productivity and reduce inflationary pressures on food commodities. "Innovative solutions in agriculture and allied sectors will be pivotal in ensuring food security and combating inflationary pressures," she stated, envisioning a transformative impact on India's agricultural landscape.

A Decade of Strategic Focus

Sitharaman’s remarks reflect the government’s intent to pursue sustainable economic growth, balance fiscal discipline with developmental needs, and prioritize innovation in key sectors. Her call for a cohesive approach to debt management, supply chain resilience, and climate action underscores India’s readiness to navigate the evolving global economic landscape.