FM Sitharaman Announces Rs 1 Lakh Crore Economic Stabilisation Fund Amid Global Shocks
FM Nirmala Sitharaman says fiscal deficit will stay at 4.4% despite extra spending
New Delhi: Amid uproar in the Lok Sabha, Union Finance Minister Nirmala Sitharaman on Friday silenced the Opposition, saying that the central government is setting up a Rs 1 lakh crore economic stabilisation fund to strengthen its ability to manage external disruptions and maintain fiscal stability. Besides, she also said that the fiscal deficit for the current financial year would remain within the budget target of 4.4 percent of GDP despite additional expenditure.
“The proposed stabilisation fund is designed to function as a fiscal buffer in times of global uncertainty, including the present tensions in West Asia,” the finance minister said during the debate on the second batch of supplementary demands for grants for 2025-26. Later, supplementary demand for grants was passed in the Lok Sabha after a voice vote, allowing the government to spend an additional Rs 2.01 lakh crore in the current fiscal.
Through the second batch of supplementary demands, the government sought the House’s nod for spending a gross of Rs 2.81 lakh crore extra in the current fiscal year. With additional receipts of Rs 80,000 crore estimated for the current fiscal year in the supplementary, the net additional cash spending will be Rs 2.01 lakh crore. The House also passed the Appropriation Bill 2026, which seeks to authorise the payment and appropriation of certain further sums from the consolidated fund of India for the services of the financial year 2025-26.
While replying to the debate on the supplementary demands for grants, she said that the fund would act as a buffer to absorb shocks arising due to unforeseen global challenges like the current one in West Asia. “The Rs 1-lakh crore economic stabilisation fund will give fiscal headroom to allow India to respond to global headwinds,” the finance minister said.
The finance minister also outlined the details in the supplementary demand for grants regarding meeting the fertiliser demands of farmers in the country. “There will be no shortage of fertilisers for farmers and adequate provision has been made in the supplementary demands for grants. Rs 9,000 crores is transferred to the states for various reasons such as elections and healthcare,” she said, while emphasising the allocation for ex-servicemen contributory health scheme.
On fiscal balance, Sitharaman also said the fiscal deficit for the current financial year (2025-26) will be within the revised estimates or RE. In RE 2025-26, the fiscal deficit has been estimated at par with Budget Estimates of 2025-26 at 4.4 per cent of GDP. “There is no increase in expenditure beyond the BE of 2025-26 due to the second supplementary,” she said.
Parliament’s nod has also been sought for an extra spending of Rs 19,230 crore towards fertilisers' subsidy and Rs 23,641 crore for subsidies under the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY). Other major expenditure heads include Rs 41,822 crore for the defence ministry. In the RE for the current fiscal year, the government had cut total expenditure to Rs 49.65 lakh crore, from Rs 50.65 lakh crore in BE. Till January, the government had spent Rs 36.90 lakh crore, according to Controller General of Accounts (CGA) data.
