As a new government takes shape, the Ministry of Finance gets back Nirmala Sitharaman as the finance minister. During her earlier stints, she presented five Union Budgets and one Interim Budget. As Sitharaman gears up to take the coveted role once again, her term as FM can be said to be one of the crucial ones that contributed to the country's economic growth and resilience, including seeing India become the fifth-largest economy globally.
India's First Full-time Woman FM
Appointed in May 2019, Sitharaman became the first full-time woman finance minister of India, taking over a critical portfolio during a challenging period marked by global economic uncertainties and domestic financial issues. The only woman leader to have held the position in India was Indira Gandhi, who held it as an additional portfolio for one year in 1969.
Tax Reforms With GST
One of Sitharaman's early and most notable achievements was the implementation of the Goods and Services Tax (GST). Although the groundwork was laid by the previous administrations, as the FM, she played an important role in making it a reality and ensuring its smooth implementation 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. Despite initial challenges, GST has streamlined tax administration and increased tax revenue, contributing to a more transparent and efficient tax system, and has become an integral part of India's economic framework.
Democratising Digitisation: Digital India
Sitharaman also played a crucial role in driving the Digital India initiative, which aimed to transform India into a digitally empowered society and knowledge economy. Under her stewardship, the government introduced various digital payment systems, including the Unified Payments Interface (UPI), which revolutionised the way financial transactions are conducted in India. The UPI system made digital payments accessible to millions, fostering financial inclusion and reducing the reliance on cash.
Digital India did not stop there but progressed to make India among the rare examples where ecommerce too has been made available to the masses, opening new opportunities for growth across tiers.
The Big Infra Bet
One very significant step taken in her term was also the National Infrastructure Pipeline (NIP). NIP was launched with 6,835 projects and has expanded to capture over 9,288 projects with a total outlay of Rs 108.88 lakh crore between 2020 and 2025. The total capital expenditure in the infrastructure sector in India for 2020 to 2025 is projected at Rs 111 lakh crore, according to a government report.
These projects are across the country, aiming 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 & Increasing Competitiveness
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.
Sitharaman's tenure also saw the strategic disinvestment of public sector enterprises. By privatising certain state-owned companies, the government aimed to increase efficiency and competitiveness while reducing the fiscal burden. Notable disinvestments included Air India and several public sector banks.
Banking Sector: The Bold Moves
In 2020, under Sitharaman's guidance, and with the approval of the Central government, a major amalgamation of public sector banks was executed. 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.
Beyond the public sector, 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.
From Pandemic To Wars, Creating An Atmanirbhar Bharat
During her tenure, Sitharaman was faced with the unprecedented challenge of 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 reduce 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 tenure as India's Finance Minister can be described as 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 have significantly contributed to India's economic growth and resilience.
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