Highlighting the growing challenge of inter-generational debt, Finance and Corporate Affairs Minister Nirmala Sitharaman on Wednesday underscored the need for economies to prioritise “debt management and financial security” in the coming decade. She cautioned against placing an excessive financial burden on future generations, calling for sustainable fiscal policies to address the issue.

“Responsible economies can’t be run with borrowings so large that the next generation already knows the pain and liability they are facing. After all they are going to be passed through as taxation to generate that resource to pay back the debt that you have taken”, Sitharaman said at the second edition of the Global Economic Policy Forum organised jointly organised by the Finance Ministry and Confederation of Indian Industry (CII) in the capital. 

This year’s GEPF theme is  “Decadal priorities for the global economy”.

Sitharaman said that government and industry must work together to better manage debt at national and sub-national levels. 

“This should be a point of priority for the decade as much for you (industry), but more for the government”, she said. 

“It is important for us to manage our debt. Covid brought us to a situation where whether you like it or not, you had to borrow. Iam not saying we remained outside of borrowing. We also borrowed. But we are super conscious about the fact that we cannot burden our forthcoming generations with debt that is not sustainable”.

She added that in this coming decade, the priority must be to manage finances, borrow to build assets, and manage better, but it cannot leave the next generation worried about how they can service it.

Sitharaman’s remarks on the need to focus on debt management are a clear pointer that the government may, in the upcoming budget, take steps to rein in national debt, which has increased post-COVID but has remained under manageable levels. 

Inflation a Global Worry

Sitharaman underscored the need to “restore global calm” as wars and skirmishes are raising inflation in the global economy. 

“War should be avoided as they are main cause of supply chain disruptions. Inflation is globally a big challenge. The primary cause of inflation is war. It is Incumbent upon industry, government and policymakers to tirelessly try for normalcy”, Sitharaman added. 

The Finance Minister also urged the industry to realign itself with the supply chain lessons learned in the last three years. 

Climate Change 

Noting that climate change has hit everyone, Sitharaman underscored the need for the global south, including India, to commit to tackling the situation in the same way they had committed to eliminating poverty. 

She also said that Agriculture will require much more innovation and will have to be applied in a way that improves farmers’ livelihoods. The issue of handling water will have to be a decadal priority. 

Sitharaman said that the Agriculture stack will be the next big innovation from India, riding on the success of recent digital public infrastructure initiatives.