Stating that the West Asia conflict has evolved from a “regional security concern” into a “systemic tremor”, Union Finance Minister Nirmala Sitharaman on Monday said the current year is more challenging as the country moves from a “landscape of shocks” to one of “permanent volatility”. A dividend of a decade of fiscal discipline has enabled India to offer fiscal and monetary support to “lean against the wind” during economic downturn while many countries have no such room to manoeuvure as they deal with high debt and large deficits, she said.“It is also important to note that a good public finance policy improves the counter-cyclical capacity of fiscal policy — especially the ability to “lean against the wind” in economic downturn. Today, many countries with high debt and large deficits have no room to manoeuvre and they face a grim choice between austerity and instability”“On the contrary, India has fiscal space — room to maintain our capex programme, room for the RBI to cut rates, room to offer targeted support to affected sectors. This is the dividend of a decade of fiscal prudence and discipline. This is the strategic value of fiscal prudence that pays dividends across decades. Therefore, we have been able to reduce the excise duty on diesel and petrol, specific exemptions were given on critical petrochemical products and SEZs (special economic zones) to operate in DTA (domestic tariff area),” she said.Speaking at the ‘Golden Jubilee Celebrations’ of the National Institute of Public Finance and Policy (NIPFP), the finance minister said India’s debt profile stands out against other nations who face a constrained policy space after spending decades running expansionary fiscal policies. India’s general government debt-to-GDP ratio, which is debt of both states and Centre, is the lowest among major economies after Germany at approximately 81%, she said. “More importantly, India is the only major economy where the IMF projects this ratio to fall significantly — to 75.8% by 2030 — while the debt outlook for the advanced economies such as the US, China, Germany, and others is projected to worsen,” Sitharaman said.India’s external debt-to-GDP ratio was 19.1% (as of September 2025), one of the lowest in the emerging market world, she added. India’s foreign exchange reserves, at over $688 billion, as of March 31, 2026, provide import cover for approximately 11 months, and that’s “a substantial buffer to hold”, she said.Sitharaman said this is the result of “deliberate, sustained, and sometimes politically difficult choices” made over years of fiscal management. “For a rapidly progressing economy like ours, sound fiscal management is a policy imperative,” she said.Stating that public finance is not only about expenditure but also revenue mobilisation, the finance minister emphasised that a robust, fair, and efficient revenue system is essential for governance. “Revenue mobilisation is not just “tax rates”; it is also the administration of how the state reduces compliance friction for honest taxpayers while improving detection and deterrence for evasion,” she said.Story continues below this adShe said the tax administration system once relied on high rates, narrow bases, discretionary assessments, and adversarial enforcement, and it now rests on four pillars — simplification, technology, trust and transparency. When asked about the need to expand the tax base and not rely on the same set of taxpayers for revenue generation, Sitharaman said it takes a lot of effort to broaden the base and “not so ideal route”.Giving the example of the earlier imposition of Tax Deducted at Source (TDS) for various transactions, Sitharaman said the idea was to track high-value transactions and match with tax assessment data but it did not find favour. “…earlier stages of AI being used in CBDT did tell us that many such TDS payers are not even assessees. So, that was one route through which we wanted to be sure that we are touching transactions which will reveal if there are people doing that kind of a big time expenditure who are assessees and if they are not, as per the narrative goal, we are not going to harass them, we are not going to be at their doors, but we certainly would like to send them a mail to say — this is the TDS, the TDS is no new tax, but you can align it and reconcile it with the tax that you would pay and so on. But even TDS costs a lot of heartburn and people say: oh, tax terrorism, more tax from this government. No, if you’re a taxpayer this is anyway going to be aligned,” she said.