India is on the brink of a significant economic change which is, to a large extent, a result of a concerted effort towards fiscal discipline. As highlighted in a Franklin Templeton report titled “How India’s Fiscal Discipline is Powering India’s Affluence Decade”, this disciplined strategy has not only altered the country’s income hierarchy but also made India the leading consumer story of the world – from a consumption model based on survival to one driven by ambition, thus creating the conditions for a new growth era.
The vision behind fiscal discipline
Fiscal modulation under Prime Minister Modi was characterized by the avoidance of popular but short-lived measures in favor of stability and durability. When the COVID-19 pandemic hit, main Western countries resorted to money printing to boost demand, thus causing double-digit inflation and financial instability, whereas India maintained strict control.
Through the JAM Trinity platform, the government implemented a highly focused digital delivery scheme to directly help the receiving ends of the welfare system, thus, it was able to avert the dissipative expenditure and leakages that had troubled the already existing welfare schemes.
India’s response was not only moderate, but also well-thought-out: the government, determined to tighten its fiscal belt, was courageous enough to go against the huge political pressure for easing the budget.
This is very different from the Congress-led UPA government’s behavior during the 2008 financial crisis when it facilitated unbridled loan distributions which consequently caused the banking crisis, increased non-performing assets, and led to a fiscal deficit that not only hampered growth but also lowered investor trust for a long time.
Numerical proof of fiscal prudence
According to Franklin Templetion’s report The positive efects of the India choices are reflected in India’s fiscal figures. By 2035, the share of Indian households that can be termed as upper-middle or rich will be almost
25% which is just about twice as high as the 11% in 2010.-a rise that was made possible by the fourfold increase of per capita income from 1,360 in 2010 to more than ₹5,200 projected in 2031.
Non-essential consumption is set to increase drastically, going up from 36% of total household consumption at present to 43% by the fiscal year 2030, to reflect premiumisation and aspirational consumption patterns.
One of the most important measures of fiscal discipline – India’s Debt-to-GDP ratio – has been going down gradually even as India has been spending more capital. At present, India has one of the lowest Debt-to-GDP ratios in the world, which attests to sound debt sustainability.
In contrast to countries that suffer from borrowing beyond their means, India’s fiscal condition is strong: the government is able to pay its debt without defaulting or seeking bailout assistance.
This carefulness is also emphasized by the implementation of an inflation-targeting framework in 201, under which inflation has been on a downward trend, thus, contributing to the strength and efficiency of India’s fiscal management. While investments in infrastructure now are doing at an unprecedented speed – they are being financed through
Policy impact and structural change
India’s tackle of fiscal discipline has not diminished its desire to grow; rather, it has facilitated purposeful investments that will have a significant economic impact in the future. India has been converted into a manufacturing center for electronics, automobiles, and pharmaceuticals through the PLI (Production Linked Incentive) programs.
The Semiconductor Mission has lured global tech giants to establish fabrication units and design facilities, while India’s digital public infrastructure Initiative has become a world leader in financial inclusion and innovation.
Moreover, each law that the government passes serves as a testament to its determination to prefer meaningful progress over gaining popularity. These measures have led to the emergence of a new governance philosophy that is deeply ingrained in the country’s long-term national
India’s affluence decade is not an accidental unfolding, but a result of purposeful and disciplined fiscal management. With the help of judicious spending, debt control, and pioneering policy frameworks, India is progressing towards a future where prosperity is accessible to all, opportunity is facilitated by technology, and background does not limit one’s ambition.
The transformation of the country is built on fiscal foresight and institutional stability, as described in “How India’s Fiscal Discipline is Powering India’s Affluence Decade”, thus, India is setting a global standard for miles and miles of responsible economic stewardship to follow.
