Positive sentiment playing out in urban areas too: Finance Minister

By Admin

30 Jun, 2025

India's economic engine is picking up steam again, and this time, the optimism is clearly visible not just in rural India but also across urban landscapes. Finance Minister Nirmala Sitharaman, in a recent candid interview, emphasized the rising wave of positivity in consumer sentiment, private investments, and strategic trade engagements especially with the United States.

Urban Revival and Private Investment Gains

According to the Finance Minister, signs of recovery are playing out strongly in urban regions. “From April, there have clearly been signs of the positive consumer sentiment playing out, thanks to the income tax reliefs,” she noted. This recovery is complemented by a visible uptick in private sector investments and capacity expansions after a brief period of sluggishness. Private companies, buoyed by surplus cash reserves, are now moving from passive earnings to active investments signaling a renewed confidence in India’s growth trajectory.

Strategic Trade Talks with the US

On the international front, as the deadline to avoid reciprocal US tariffs nears, India is treading a carefully balanced path. Sitharaman confirmed that while India is open to forging a meaningful trade agreement with the United States, the interests of Indian farmers and livestock breeders will remain non-negotiable. Reacting to then-President Trump’s comments about opening Indian markets through a bilateral trade agreement (BTA), Sitharaman said, “Yes, we would love to have an agreement, a big, good, beautiful one; why not?” Still, she reaffirmed agriculture and dairy as major red lines where “a high degree of caution” is being exercised.

Second-Generation Reforms on the Horizon

To further solidify structural economic resilience, the government is preparing to roll out a wave of second-generation reforms. These include encouraging private participation in nuclear energy, improving banking efficiency, and a long-awaited rationalization of GST rates. The Finance Minister hinted that the weighted average GST rate may soon be lowered to boost compliance and consumption.

“The expectation is that the average GST rate will come down. You can have revenue buoyancy if rates are low enough. That leads to an expansion,” she explained, citing global experiences where lower GST/VAT rates led to increased compliance and stable revenues.

Balanced Growth and Export Boost

Sitharaman stressed the need for balanced growth across states. She urged all states to continue improving the investment climate, warning that areas lagging behind could miss out on the incoming wave of capital. In addition, she acknowledged the need to support merchandise exports, particularly through tax reforms that address non-neutralized local levies.

Reforms in Energy and Labour

India is also taking a significant step forward in energy efficiency by promoting the development of small modular nuclear reactors. Sitharaman revealed that necessary legal changes to the Atomic Energy Act and Civil Liability for Nuclear Damage Act will be initiated soon, likely in the upcoming monsoon session, to allow private sector investments in nuclear power infrastructure. Meanwhile, there is also a clear indication that the government is not backing down on the implementation of the three new labour codes, with many states already on board.

Banking Sector Vigilance

The Finance Minister acknowledged challenges in the banking sector, especially the slower growth of CASA (Current Account Savings Account) deposits. She noted that public sector banks are being encouraged to explore new strategies to boost deposits and manage the growing trend of retail savings flowing into stock markets.

Conclusion

Finance Minister Nirmala Sitharaman’s outlook reflects a government that is actively steering India towards becoming a Viksit Bharat by 2047. With structural reforms underway, strategic trade positioning, and a positive urban consumer sentiment, India is well-poised to navigate global headwinds while ensuring inclusive and balanced economic growth. The road ahead may involve tough negotiations and transformative policy shifts but the direction is clear and optimistic.