India Establishes Rs 1 Lakh Crore Economic Stabilisation Fund to Counter Global Disruptions
In a significant move to enhance fiscal resilience, the Indian government is establishing a Rs 1 lakh crore Economic Stabilisation Fund. Finance Minister Nirmala Sitharaman made this announcement on Friday during a Lok Sabha debate on supplementary demands for grants. The fund is designed to serve as a robust fiscal buffer, enabling India to navigate external shocks and maintain economic stability in times of global uncertainty.
Fiscal Headroom Amid Global Headwinds
Sitharaman emphasized that the Economic Stabilisation Fund will provide crucial fiscal headroom, allowing India to respond effectively to international challenges. This initiative comes amid heightened tensions in West Asia and other global disruptions that could impact the economy. The finance minister stated, quoted by PTI, that the fund aims to strengthen India's ability to manage such external pressures without compromising fiscal discipline.
Supplementary Demands and Fiscal Projections
Alongside the stabilisation fund, the government has sought Parliament's approval for additional gross expenditure of Rs 2.81 lakh crore for the ongoing financial year. After accounting for extra receipts of Rs 80,000 crore, the net incremental cash spending is estimated at Rs 2.01 lakh crore. Sitharaman assured that the fiscal deficit for 2025-26 will remain within the Revised Estimates, aligning with the Budget projection of 4.4% of GDP.
She clarified that the latest supplementary demands do not push total expenditure beyond the Budget Estimates for the year. Amid Opposition protests over issues like LPG availability, Sitharaman reiterated that there is no increase in expenditure beyond the BE of 2025-26 due to the second supplementary. In the Revised Estimates, overall government spending for the current fiscal was adjusted downward to Rs 49.65 lakh crore from the initial Budget figure of Rs 50.65 lakh crore.
Key Allocations and Spending Details
Data from the Controller General of Accounts reveals that Rs 36.90 lakh crore had been spent up to January. The supplementary demands include substantial additional allocations for critical sectors:
- Fertiliser Subsidy: An extra Rs 19,230 crore to ensure availability for farmers, with Sitharaman asserting there will be no shortages.
- Pradhan Mantri Garib Kalyan Anna Yojana: An additional Rs 23,641 crore to support food security initiatives.
- Defence Ministry: A further Rs 41,822 crore to bolster national security capabilities.
These allocations underscore the government's focus on sustaining key welfare and security programs while preparing for economic contingencies. The Economic Stabilisation Fund represents a proactive step to safeguard India's fiscal stability against unpredictable global events, reinforcing the nation's economic governance framework.
