Economic Stabilisation Fund To Tackle Global Headwinds Like The Ongoing Crisis, Says FM; Assures On FY26 Fiscal Deficit Target

The Economic Stabilisation Fund will provide fiscal headroom to the government, allowing it to respond to global headwinds such as recent crises, said Union Finance Minister Nirmala Sitharaman on Friday.

She said that the Rs 57,381 crore fund may seem a big amount but it was important in handling the ongoing global disruptions, indicating towards the United States-Israel-Iran war in West Asia. The minister further assured that despite the Rs 2 lakh crore sought in supplementary demand by the government, India would achieve its fiscal deficit target for FY26.

The war has upended the energy supply chain across the world with the narrow but crucial Strait of Hormuz choked for the last two weeks.

The finance minister, responding to the discussion on the second batch of supplementary demands for grants in Lok Sabha, said that the Economic Stabilisation Fund was in anticipation of adverse events which cannot be anticipated.

She said that India has swiftly managed various global crises in the last five years, including the Covid-19 pandemic. Yet, the country was able to recover from the shocks and continued on the path of economic reforms.

“The fiscal reforms, particularly the policy initiatives undertaken post Covid-19 made sure that the economy recovers well. We have strengthened the overall economic framework,” she said.

This has enabled India to absorb economic shocks of various nature without deviating from the fiscal consolidation roadmap, Sitharaman added.

“The proposed Economic Stabilisation Fund will provide fiscal headroom to allow India to respond to global headwinds such as the recent crisis, unanticipated supply chain disruptions, unexpected shocks to sub-sectors in Indian economy and any event that may have significant fiscal implications,” she said.

“In anticipation of what cannot be anticipated, we are coming up with the economic stabilisation measures,” the minister said.

In her response, Sitharaman also assured that the Rs 2.81 lakh crore sought by the government for FY26 under the supplementary demands will not derail the country from achieving the fiscal deficit target of 4.4 percent in the financial year.