The industry chamber, Confederation of Indian Industries (CII), on Thursday proposed a four-pronged fiscal strategy for the Union Budget 2026-27.
“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,” Chandrajit Banerjee, Director General of CII said in a statement.
Keeping this in mind, the industry body has come out with a four-point strategy focussing on debt stability, fiscal transparency, revenue mobilisation, and expenditure efficiency.
On debt management, the industry body suggested maintaining central debt at roughly 54.5±0.2 per cent of GDP and the fiscal deficit at 4.2±0.1 per cent of GDP in FY27 will preserve macro credibility while supporting growth. This is in line with the Centre’s glide path for lowering debt-GDP ratio to 50 per cent (1 per cent more or less). “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,” CII said.
On the second issue of fiscal transparency, it recommended reviving the Medium-Term Fiscal Framework with a rolling 3–5-year roadmap for revenue, expenditure, and debt. “A Fiscal Performance Index should be institutionalised to assess the quality of public finances across the Centre and States and link performance to fiscal transfers, encouraging prudent and reform-oriented states,” it said while adding that This should be complemented by a Fiscal Stability Report that evaluates risks from commodity prices, financial volatility, climate shocks, or other macro disruptions.
On the issue of revenue mobilisation, CII recommended greater use of digital and AI-based tools to expand the tax base through seamless data exchange between GST, income tax, and digital payment systems. “Linking tax returns with high-value transactions and deploying advanced analytics can enable real-time detection of evasion while lowering compliance costs,” it said.
Further to unlock value from public assets, government should announce a three-year privatisation pipeline of Public Sector Enterprises (PSEs) in the non-strategic sectors as announced in the ‘Strategic Disinvestment Policy’. 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.
Under the fourth pillar of expenditure efficieny, CII reminded that Public Distribution System (PDS), covering 813 million people or 57 per cent of the population, faces challenges of outdated data and leakages. “Updating beneficiary lists using the latest Household Consumption Expenditure Survey (2023–24), narrowing coverage to the bottom 15 per cent, and shifting towards cash or voucher-based transfers can enhance efficiency while also promoting dietary diversification,” it said.
Similarly, fertilizer subsidies, which accounts for 39 per cent of total central subsidies, should transition to a Direct Benefit Transfer (DBT) model to curb misuse and promote balanced fertilizer use. Issuing the DBT amount or fertiliser coupons before sowing can address farmers’ concerns about upfront expenses, CII said.
Published on December 25, 2025
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