India's Consumption Plays Key Role in Sustaining Economic Growth, Predictable Support Crucial for GDP Expansion: FM Sitharaman

India's Finance Minister Emphasizes Predictable Policy Support for Continued Growth

Union Finance Minister Nirmala Sitharaman stressed the importance of predictable policy support to sustain the country's economic growth momentum, particularly in the domestic consumption sector. Speaking at an event organized by the State Bank of India (SBI) on Friday, Sitharaman noted that domestic consumption is driving India's growth, which remains the fastest in the world.

GDP Expansion and Domestic Consumption

India's GDP expansion is largely driven by domestic consumption, with the sector emerging as a key growth driver. Sitharaman emphasized that while consumption is essential for growth, it is equally important to have predictable policies in place to support the sector. The finance minister highlighted the need for constant support to India's domestic manufacturing, agricultural growth, tourism, IT, and related services sectors to maintain the country's growth story.

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Exports and Policy Support

Sitharaman also appreciated the efforts of Indian exporters, who have managed to find new markets despite facing challenges such as US tariffs. The finance minister acknowledged that exports are crucial for India's growth and stated that the government will provide support to affected sectors due to the current Middle East crisis. She noted that the government has already responded with a targeted package for US tariff-impacted entities.

Banking Sector and Digitalization

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Sitharaman emphasized the need for banks to focus on physical contact with customers as they go global and digital. She urged banks to adopt an open architecture approach when selling third-party products, with a committee under the Indian Banks Association (IBA) looking into the matter. The finance minister also suggested that there is no need to be concerned about the asset quality impact at banks due to the Middle East crisis, given the multi-decade low non-performing assets.

AI and Banking

The finance minister spoke about the need for banks to work together on Anthropic's AI model Mythos, with a meeting held in New Delhi on Thursday. Sitharaman stated that all lenders have been asked to work together under the leadership of SBI chairman C S Setty, who also chairs IBA. She noted that there will be a lot of interaction within the banks in the coming weeks to understand the implications of AI and how to counter the challenge.

LPG Demand and Banking

Sitharaman stated that LPG demand is being largely attended to by the companies, with everybody getting cooking gas. However, she noted that there were a few instances of challenge. The finance minister emphasized the need for banks to have better connect with customers amid the progress on the digital front, stressing that the human element is the spirit of inclusion in banking.

SBI's New Local Head Office

The finance minister was speaking at an event where SBI inaugurated a new local head office, which will serve the bulk of Maharashtra except the Mumbai metropolitan area and the Konkan region. SBI chairman C S Setty termed this as a strategic move for SBI, noting that Maharashtra delivers sizeable business for the country's largest lender.