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Informist, Tuesday, Aug. 19, 2025

NEW DELHI – The Parliament's Standing Committee on Finance has pitched for increasing the investment rate to around 35% of GDP from the current 31% to achieve the ambitious growth target of 8% annually for at least a decade. In its report tabled in Parliament on Tuesday the panel said, "financing this may result in higher levels of Current Account Deficit, which is challenging under current global circumstances."

 

The committee emphasised the need for domestic-led growth, for which deregulation is crucial. "The Committee note the collaborative approach through the deregulation task force chaired by the Cabinet Secretary, which facilitates dialogue with States on best practices in land, labour, capital, and regulatory reforms. The Committee feel that this model of cooperative federalism can streamline business processes and foster an investor-friendly environment," the report said.

 

Former Department of Economic Affairs Secretary, Ajay Seth, in his comments to the Parliamentary Committee in June had said that "deregulation is important to drive growth and create jobs", the report added.

 

The committee also said that tailored fiscal reforms may be promoted in highly indebted states to improve their fiscal health while maintaining their capacity to invest in critical infrastructure and social development. "To ensure long-term macroeconomic stability and equitable growth, the Committee recommend sustained fiscal discipline at the sub-national level and urge the creation of a mechanism to bring down the debt-to-GDP ratio to the recommended levels," the report said.

 

The 2025-26 (Apr-Mar) Union Budget marked the end of the fiscal deficit targeting era and the start of the debt-to-GDP. The government is now looking to cut its debt-to-GDP ratio to 50% by March 2031, with a band of 100 basis points on either side providing some flexibility. The ratio, which was 57.1% in FY25, will need to be reduced by 122 bps on average every year if the mid-point of the 49-51% range is to be met.  End

 

Reported by Sagar Sen

Edited by Ashish Shirke

 

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