Parl panel for more investment, fiscal reforms to attain 8% growth

The Parliamentary Standing Committee on Finance has called for increasing investment rate to approximately 35% of the GDP, up from the current 31%, to achieve the ambitious growth target of 8% annually.

In its report tabled in Rajya Sabha on Tuesday, the committee said the financing might result in higher levels of current account deficit, which is challenging under current global circumstances. The panel, headed by BJP leader Bhartruhari Mahtab, emphasised the need for domestic-led growth. It noted the collaborative approach of the deregulation task force, chaired by the Cabinet Secretary, which fosters a dialogue with states to adopt best practices in land, labour, capital, and regulatory reforms. "This model of cooperative federalism can streamline business processes and foster an investor-friendly environment," the report stated.

Department of Economic Affairs Former Secretary Ajay Seth, in comments made to the committee in June, reinforced that "deregulation is important to drive growth and create jobs".

To address fiscal challenges, the committee recommended tailored fiscal reforms for highly indebted states to strengthen their financial health while preserving their ability to invest in critical infrastructure and social development. It also stressed the need for sustained fiscal discipline at the sub-national level and proposed a mechanism to reduce the debt-to-GDP ratio to recommended levels, ensuring long-term macroeconomic stability and equitable growth.

The report comes in the context of the 2025-26 Union Budget, which shifted focus from fiscal deficit targeting to a debt-to-GDP ratio target of 50% by March 2031, with a flexibility band of 100 basis points. The current ratio of 57.1% in FY25 requires an average annual reduction of 122 basis points to meet the 49-51% target range.

The committee’s recommendations signal a strategic push for structural reforms and fiscal prudence to position India as a robust, investment-driven economy capable of achieving sustained high growth