CII lays out fiscal strategy to bolster macro stability ahead of budget

Ahead of the FY27 Union Budget, CII has outlined a four-point fiscal strategy focused on debt discipline, transparency, revenue mobilisation and spending efficiency

The Confederation of Indian Industry (CII) on Thursday outlined a four-point fiscal strategy for sustaining macroeconomic stability, calling for strict adherence to the government’s debt glide path, stronger fiscal transparency, higher revenue mobilisation, and sharper expenditure efficiency ahead of the 2026-2027 (FY27) Union Budget.

 

The alignment of strong growth with price stability, CII said, reflects proactive fiscal management and macroeconomic discipline, but warned that sustaining the momentum would require deeper institutional reforms.

 

“India has achieved a rare convergence of high growth, low inflation, and improving fiscal indicators. The next Union Budget must continue this momentum through disciplined fiscal management and deeper institutional reforms,” said Mr Chandrajit Banerjee, Director General, CII.

 

 

The industry body suggested keeping central debt at approximately 54.5 per cent of GDP and the fiscal deficit near 4.2 per cent by FY27, in adherence to the government’s debt glide path targeting a consolidated debt level of around 50 per cent of GDP by FY31.

 

“Strengthening public finances, however, must extend beyond the Centre to States and urban local bodies (ULBs), whose fiscal positions increasingly shape overall debt dynamics and the durability of macroeconomic stability,” the industry body emphasised in a press statement.

 

To strengthen fiscal credibility, CII has proposed reviving a Medium-Term Fiscal Framework with a rolling three-to-five-year road map for revenue and expenditure, complemented by a Fiscal Performance Index and an annual Fiscal Stability Report assessing emerging risks.

 

On revenue mobilisation, CII pointed out that India’s combined tax-to-GDP ratio of 17.5 per cent remains below peers and recommended greater use of digital and AI-driven analytics to detect evasion and expand the tax base. It also backed a calibrated privatisation programme with a three-year disinvestment pipeline of public-sector enterprises. “As an interim measure, CII recommends undertaking calibrated disinvestment, gradually reducing government stake in PSEs to 51 per cent, retaining majority ownership, and eventually to 26–33 per cent over time. Parallely, efforts at full privatisation should continue, as per CII,” it recommended.

 

For expenditure reform, CII suggested targeted rationalisation of subsidies, including a shift to direct benefit transfers in public distribution and fertiliser subsidy systems, and consolidation of Centrally Sponsored Schemes for higher impact.

 

CII also proposed strengthening state fiscal governance through credit ratings for State Development Loans (SDL) and enhanced fiscal disclosure. Urban centres, it added, should modernise property taxation through Geographic Information System (GIS)-based systems under a proposed Systematic Modernization and Resource Transformation (SMART) Cities Enablement Mission, supported by a Fiscal Health Index for ULBs.

 

“Fiscal prudence and growth go hand in hand,” CII said, stressing that strong fiscal frameworks, greater transparency and spending efficiency across all tiers of the government, will be vital to sustaining India’s growth and macroeconomic resilience.