The Confederation of Indian Industry (CII) has laid out a comprehensive set of recommendations for the government, urging a sharp focus on institutional reforms and fiscal discipline in the upcoming Union Budget for 2026-27. The industry body presented its proposals on Thursday, aiming to sustain India's current economic momentum.
Core Pillars: Fiscal Prudence and Revenue Enhancement
CII Director General Chandrajit Banerjee emphasised that India is currently experiencing a favourable phase of high growth, low inflation, and strengthening fiscal health. He stated that the next budget must reinforce this trend through disciplined fiscal management and deeper institutional reforms.
A primary concern is India's tax-to-GDP ratio, which stands at a combined central and state level of only 17.5%. To combat tax evasion and boost collections, CII advocates for a technology-driven overhaul. The recommendations include linking income tax returns with high-value transactions and deploying advanced data analytics and artificial intelligence to identify non-compliance in real-time.
On fiscal consolidation, the body stressed adherence to the government's stated goal of reducing public debt to 50 ±1% of GDP by 2031. It also proposed the formulation of a rolling 3-5 year fiscal plan for both revenue and expenditure to enhance predictability and planning for all stakeholders.
Strategic Disinvestment and Social Sector Focus
In a significant push for privatisation, CII recommended a structured exit of the government from non-strategic public sector enterprises. The proposed roadmap suggests reducing the government's stake to 51% initially, followed by a further reduction to 26-33% over a three-year period, while continuing to advocate for complete privatisation in certain cases.
The industry lobby also turned its attention to critical social infrastructure. It highlighted inefficiencies in the massive public food distribution system, which serves 813 million beneficiaries but suffers from outdated data and wastage. CII called for increased budgetary allocation towards education, healthcare, skill development, and climate resilience. It further suggested using digital platforms to monitor the effectiveness of this spending.
Incentivising States and Ensuring Transparency
To promote better fiscal management across the country, CII proposed an innovative incentive mechanism. It recommended the creation of a fiscal performance scoring system to evaluate both central and state governments on their public financial management. States that demonstrate superior fiscal discipline and implement progressive reforms would be rewarded with additional funds.
This suite of recommendations underscores the industry's view that maintaining India's growth trajectory requires not just cyclical measures but foundational reforms in tax administration, public sector efficiency, and fiscal transparency.
