As a new government was sworn in on June 9, NDA 3.0 led by Prime Minister Narendra Modi retained key ministers in the Union Cabinet including Nirmala Sitharaman as Finance Minister (FM), signalling the continuity of the policies of NDA 2.0. Sitharaman’s first term as FM, which saw her present five Union Budgets and one Interim Budget, put India firmly on the path of economic growth and made it the fifth-largest economy globally, despite the debilitating impact of the Covid-19 pandemic. Sitharaman has many achievements to her credit but here we present some of the landmark ones.
India’s First Full-time Woman FM
Appointed in May 2019, Sitharaman became India’s first full-time woman finance minister, taking over a critical portfolio during a challenging period marked by global economic uncertainties and domestic financial issues. Prior to her, former prime minister Indira Gandhi held the position as an additional portfolio for a year in 1969.
Tax Reforms With GST
One of Sitharaman’s first achievements was the implementation of the Goods and Services Tax (GST). Although the groundwork was laid by the previous administrations, as FM she played an important role in ensuring its smooth rollout and subsequent modifications. GST aimed to unify the Indian market by replacing multiple indirect taxes with a single tax, simplifying compliance, and reducing the cascading effect of taxes. GST has streamlined tax administration and increased tax revenue, contributing to a more transparent and efficient tax system thereby becoming an integral part of India's economic framework.
Democratising Digitisation
Sitharaman played a key role in driving the Digital India initiative, which aimed to transform India into a digitally empowered society and knowledge economy. Her tenure saw the introduction of various digital payment systems, including the Unified Payments Interface (UPI), which revolutionised financial transactions in India. UPI made digital payments accessible to millions, fostering financial inclusion and reducing the reliance on cash.
Digital India also made India one of the few countries to make ecommerce available to the masses, opening new opportunities for growth across cities and towns.
The Big Infra Bet
During her term the National Infrastructure Pipeline (NIP) was launched with 6,835 projects, and expanded to more than 9,288 projects with a total outlay of Rs 108.88 lakh crore between 2020 and 2025. The total capex in the infrastructure sector during 2020-2025 is projected at Rs 111 lakh crore, according to a government report. These projects aim to develop robust infrastructure, including transportation, energy and digital infrastructure, which are crucial for sustained economic growth. By boosting infrastructure development, Sitharaman aimed to create jobs and stimulate economic activity.
Ease of Doing Business
Under Sitharaman's leadership, several key reforms were introduced to enhance the ease of doing business in India. She focused on reducing the corporate tax rate, which was slashed from 30 per cent to 22 per cent for existing companies and to 15 per cent for new manufacturing firms. This bold move aimed to attract foreign investments and stimulate domestic industries. The reduction in corporate tax rates positioned India as a competitive destination for global investors, fostering economic growth and job creation.
Her tenure also saw the strategic sale of public sector enterprises, with the overall objective of increasing efficiency and competitiveness while reducing the fiscal burden. Notable disinvestments included Air India and several public sector banks.
Bold Moves in Banking
In 2020, under Sitharaman’s guidance, and with the approval of the Central government, a major amalgamation of public sector banks was undertaken. The Oriental Bank of Commerce and United Bank of India were merged into Punjab National Bank; Syndicate Bank was integrated into Canara Bank; Andhra Bank and Corporation Bank were consolidated into Union Bank of India and Allahabad Bank was merged into Indian Bank.
Besides, Sitharaman prioritised the banking sector’s health by implementing the Insolvency and Bankruptcy Code (IBC). The IBC has been instrumental in addressing the issue of non-performing assets (NPAs) by providing a time-bound resolution process for insolvent companies. This reform has not only improved the recovery rates for creditors but also enhanced the overall credit culture in the country. By addressing the bad loan problem, the IBC has restored confidence in the banking system and revitalised credit flow to productive sectors.
An Atmanirbhar Bharat
Sitharaman’s tenure coincided with the Covid-19 pandemic, which severely impacted the global economy. In response, she spearheaded the Atmanirbhar Bharat (Self-reliant India) initiative, which included a comprehensive economic stimulus package aimed at reviving the economy. The package focused on providing immediate relief to vulnerable sections of society, supporting small and medium enterprises (SMEs), and promoting indigenous manufacturing. The initiative emphasised self-reliance and aimed to cut India’s dependency on imports, thereby strengthening the domestic economy.
By promoting local production and encouraging foreign direct investment in key sectors, Atmanirbhar Bharat aimed to strengthen India’s economic resilience.
Sitharaman’s first term as finance minister can be said to have been marked by decisive leadership and strategic reforms that addressed both immediate challenges and long-term structural issues. Her focus on tax reforms, ease of doing business, banking sector health and infrastructure development significantly contributed to India's economic growth and resilience.
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