Executive Summary:
This document is the Finance Minister's response to Lok Sabha Starred Question No. 342 regarding economic volatility, specifically addressing concerns about the rising fiscal deficit, increasing inflation, and the impact of global uncertainties on the Indian economy. The response, dated August 18, 2025, outlines the government's strategies for macroeconomic management, fiscal consolidation, and protection of vulnerable sections of society. It also notes India's real GDP growth of 6.5 per cent in 2024-25.
Key Points / Main Content:
Economic Resilience and Management:
* The Indian economy has shown resilience despite geopolitical uncertainty and supply chain disruptions.
* India is the fastest-growing major economy, with a real GDP growth of 6.5% in 2024-25.
Fiscal Deficit and Inflation:
* The fiscal deficit has decreased from 9.2% of GDP in 2020-21 to 4.8% in 2024-25 and is budgeted to decrease further to 4.4% in 2025-26.
* The average retail inflation rate was 4.6% in 2024-25, the lowest in six years, and further eased to 2.4% in April-July 2025.
Export Performance and Foreign Exchange Reserves:
* India's overall exports reached an all-time high of USD 824.96 billion in 2024-25.
* Overall exports increased by 5.46% in the first quarter of the current fiscal year.
* Foreign exchange reserves can cover more than 11 months of goods imports.
Government Measures for Vulnerable Sections:
* The government is implementing schemes to protect vulnerable sections from economic volatility.
* Schemes include Pradhan Mantri Garib Kalyan Anna Yojana, Pradhan Mantri Kisan Samman Nidhi (PM-KISAN), Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), Pradhan Mantri Awas Yojana (PMAY), Deen Dayal Upadhyaya Grameen Kaushalya Yojana, Stand Up India Scheme, and Deendayal Antyodaya Yojana-National Rural Livelihoods Mission.
* Initiatives focus on access to essentials, enhanced livelihoods, and improved quality of life.
* The government is undertaking measures to stimulate economic growth through capital expenditure, infrastructure development, and financial sector reforms.
Impact Analysis:
Vulnerable Sections of Society:
Impact: Benefit from government schemes aimed at providing basic essentials, enhancing livelihood opportunities, and improving quality of life.
Action Required: Utilize the available schemes and initiatives to improve their socio-economic status.
Indian Economy:
Impact: Continues to exhibit resilience and growth despite global uncertainties, supported by prudent macroeconomic management and structural reforms.
Action Required: Maintain focus on macroeconomic stability and continue implementing growth-oriented policies.
Government of India:
Impact: Responsible for implementing and monitoring policies to ensure economic stability and protection of vulnerable sections.
Action Required: Continue to implement and refine policies related to fiscal management, economic growth, and social welfare.
Key Entities Referenced
Ministry of Finance: The Indian government ministry responsible for economic policy, financial regulation and taxation.
Department of Economic Affairs: A department within the Ministry of Finance responsible for formulating and monitoring economic policies and programs.
Lok Sabha: The lower house of the Parliament of India.
Indian economy: The economy of India.
Nirmala Sitharaman: The Finance Minister of India.
Pradhan Mantri Garib Kalyan Anna Yojana: A government scheme to provide food security during the COVID-19 pandemic.
Pradhan Mantri Kisan Samman Nidhi PMKISAN: A government scheme that provides income support to small and marginal farmers.
Mahatma Gandhi National Rural Employment Guarantee Scheme MGNREGS: An Indian labour law and social security measure that aims to guarantee the 'right to work'.
GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF ECONOMIC AFFAIRS
LOK SABHA
STARRED QUESTION NO. *342
TO BE ANSWERED ON 18.08.2025/ Sravana 27, 1947 (Saka)
ECONOMIC VOLATILITY
*342. Shri Zia Ur Rehman:
Will the Minister of FINANCE be pleased to state:
(a) whether the Government is aware of the rising fiscal deficit, increasing inflation and the
economic impact of global uncertainties such as geopolitical tensions and supply chain
disruptions on the Indian economy;
(b) if so, the details of the steps taken/being taken by the Government to protect vulnerable
sections of society from the adverse effects of economic volatility; and
(c) if not, the reasons therefor?
ANSWER
THE FINANCE MINISTER
(SMT. NIRMALA SITHARAMAN)
(a) to (c): A statement is laid on the Table of the House.STATEMENT REFERRED TO IN REPLY TO THE LOK SABHA STARRED QUESTION
NO. *342, RAISED BY SHRI ZIA UR REHMAN FOR 18th AUGUST, 2025 ON ECONOMIC
VOLATILITY
(a): Despite an environment of unprecedented geopolitical uncertainty, supply chain disruptions,
and a weak global growth outlook, the Indian economy has exhibited resilience, underpinned by
prudent macroeconomic management, credible fiscal consolidation, a resilient external sector
performance and sustained structural reforms. India remains the fastest-growing major economy,
registering a real GDP growth of 6.5 per cent in 2024-25. The fiscal deficit of the Union
Government has reduced from 9.2 per cent of GDP in 2020-21 to 4.8 per cent of GDP in 2024-25,
and is budgeted to further reduce to 4.4 per cent of GDP in 2025-26. The average retail inflation rate,
measured by the Consumer Price Index, stood at 4.6 per cent in 2024-25, the lowest in the last six
years, and has eased further to 2.4 per cent in April–July 2025. Despite the weakened global trade,
India's export performance has demonstrated resilience, with the country's overall exports reaching
an all-time high of USD 824.96 billion in 2024-25. This positive trend has continued into the current
fiscal year, with overall exports registering an increase of 5.46 per cent during the first quarter.
Furthermore, India’s foreign exchange reserves provide a cover for more than 11 months of goods
imports. This consistent macroeconomic performance underscores the Indian economy's ability to
navigate global and economic uncertainties effectively.
(b) & (c): The Government has undertaken concerted measures aimed at protecting vulnerable
sections of society from the adverse effects of economic volatility while sustaining the
momentum of broad-based and inclusive economic growth. Flagship schemes such as the
Pradhan Mantri Garib Kalyan Anna Yojana, Pradhan Mantri Kisan Samman Nidhi (PM-KISAN),
Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), Pradhan
Mantri Awas Yojana (PMAY), Deen Dayal Upadhyaya Grameen Kaushalya Yojana, Stand Up India
Scheme, and the Deendayal Antyodaya Yojana-National Rural Livelihoods Mission are being
implemented to ensure access to the basic essentials, enhance livelihood opportunities, and
improve the quality of life for the vulnerable sections. Additionally, initiatives in skilling,
entrepreneurship promotion, and social security further reinforce these efforts. In parallel, the
Government has undertaken wide-ranging measures to stimulate economic growth, including
enhanced capital expenditure, infrastructure development, financial sector reforms, and
initiatives to improve the ease of doing business.
***