New Delhi, Dec 25 (.): The Confederation of Indian Industry (CII) on Thursday unveiled a four-pillar fiscal strategy aimed at strengthening India’s macroeconomic stability, citing the country’s current “Goldilocks” phase of strong growth with low inflation.
CII noted that India’s real GDP grew by 8.0 per cent in the first half of FY26, while inflation remained well anchored, reflecting proactive fiscal policy and prudent macroeconomic management by the government.
“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 CII Director General Chandrajit Banerjee.
The first pillar of the strategy focuses on debt stability, with CII stressing adherence to the government’s debt glide path targeting public debt of 50±1 per cent of GDP by FY31.
It recommended maintaining central government debt at around 54.5 per cent of GDP and the fiscal deficit at about 4.2 per cent by FY27, while also strengthening fiscal discipline at the state and urban local body (ULB) levels.
The second pillar emphasises fiscal transparency and predictability.
CII called for reviving the Medium-Term Fiscal Framework with a rolling three-to-five-year roadmap and proposed institutionalising a Fiscal Performance Index to assess the quality of public finances across the Centre and States.
It also recommended a Fiscal Stability Report to assess risks from commodity prices, financial volatility and climate shocks.
Revenue mobilisation forms the third pillar. CII highlighted that India’s tax-to-GDP ratio of 17.5 per cent remains below that of major emerging economies. It advocated greater use of digital and AI-based tools to widen the tax base, detect evasion and lower compliance costs through seamless data sharing across GST, income tax and digital payment platforms.
CII also called for a three-year privatisation pipeline for non-strategic public sector enterprises and calibrated disinvestment to unlock value from public assets.
The fourth pillar focuses on expenditure efficiency, particularly subsidy reforms.
CII recommended updating beneficiary lists under the Public Distribution System using the latest consumption survey data, narrowing coverage to the bottom 15 per cent of the population and moving towards cash or voucher-based transfers.
It also proposed shifting fertiliser subsidies to a full direct benefit transfer model and consolidating Centrally Sponsored Schemes to prioritise high-impact sectors such as education, health, skilling and climate resilience.
CII further stressed the need to strengthen state finances by encouraging states to obtain credit ratings for their borrowings and adopt uniform fiscal disclosure standards.
Linking a portion of central capital expenditure assistance to such reforms would incentivise fiscal prudence, it said.
Highlighting the growing role of cities, CII proposed a Systematic Modernisation and Resource Transformation (SMART) Cities Enablement Mission to improve municipal finances and governance. It also suggested a Fiscal Health Index for ULBs to promote transparency and reform-linked incentives.
“A credible central fiscal glide path, stronger state and ULB fiscal frameworks, and improved transparency and spending efficiency will help India sustain high growth while preserving macroeconomic stability,” the CII said.
. VK SAS KK