The Confederation of Indian Industry (CII) has outlined a four-point fiscal strategy focusing on debt sustainability, fiscal transparency, revenue mobilisation and expenditure efficiency, calling on the government to sustain macroeconomic stability while supporting long-term growth in the forthcoming Union Budget.
In a pre-Budget representation released on Wednesday, CII said India is currently witnessing a rare Goldilocks phase, marked by strong economic growth alongside contained inflation. Real GDP growth stood at 8% in the first half of FY26, while price pressures have remained well anchored, reflecting prudent fiscal and monetary management.
“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 Chandrajit Banerjee, Director General, CII.
At the core of CII’s proposal is adherence to the government’s debt glide path, which targets a public debt-to-GDP ratio of 50±1% by FY31. The industry body said maintaining central government debt at around 54.5% of GDP and the fiscal deficit at about 4.2% of GDP by FY27 would help preserve macroeconomic credibility while supporting growth. However, it cautioned that fiscal consolidation must extend beyond the Centre to States and Urban Local Bodies (ULBs), whose finances increasingly influence overall debt dynamics.
To enhance predictability and institutional credibility, CII has recommended reviving the Medium-Term Fiscal Framework with a rolling three-to-five-year roadmap covering revenues, expenditure and debt. It also proposed the creation of a Fiscal Performance Index to assess the quality of public finances across the Centre and States, with performance-linked fiscal transfers to incentivise reforms. In addition, a Fiscal Stability Report should be institutionalised to assess risks arising from commodity price shocks, financial volatility and climate-related disruptions.
Revenue mobilisation remains a key challenge, CII said, noting that India’s tax-to-GDP ratio of 17.5% remains below that of several emerging economies. The industry body advocated greater use of digital and artificial intelligence-based tools to expand the tax base, leveraging data from GST, income tax and digital payment systems to detect evasion while reducing compliance burdens.
CII also called for unlocking value from public assets by announcing a three-year privatisation pipeline for non-strategic public sector enterprises. As an interim step, it suggested calibrated disinvestment by gradually reducing government stakes to 51% and eventually to 26–33%, while continuing efforts toward full privatisation where feasible.
On the expenditure side, CII emphasised the need for subsidy reforms. It recommended updating beneficiary data under the Public Distribution System using the latest Household Consumption Expenditure Survey and narrowing coverage to the bottom 15% of the population, along with a gradual shift to cash or voucher-based transfers. Fertiliser subsidies should transition fully to a direct benefit transfer model to reduce leakages and encourage balanced usage.
The industry body also underscored the importance of strengthening State and urban finances. It suggested encouraging States to obtain credit ratings for their borrowing instruments and adopt uniform fiscal disclosure standards. For urban centres, CII proposed modernising property taxation and launching a Systematic Modernization and Resource Transformation (SMART) Cities Enablement Mission to improve municipal finances and service delivery.
Sustained fiscal prudence, coupled with stronger institutional frameworks across all tiers of government, is essential for maintaining macroeconomic stability and achieving India’s long-term growth objectives, CII said.
This story is reported by ENS Economic Bureau of The New Indian Express.