Mumbai, Dec 25 : The Confederation of Indian Industry (CII) has outlined a comprehensive four-point fiscal strategy aimed at strengthening India’s macroeconomic stability, with a sharp focus on debt sustainability, fiscal transparency, revenue mobilisation and expenditure efficiency.
A key recommendation from the industry body is unlocking value from public assets. CII has urged the government to announce a clear three-year privatisation pipeline for Public Sector Enterprises (PSEs) operating in non-strategic sectors, in line with the Strategic Disinvestment Policy.
Privatisation and Disinvestment Roadmap
As an interim step, CII recommended calibrated disinvestment, proposing a gradual reduction of the government’s stake in PSEs from 51 per cent to around 26–33 per cent over time, while retaining majority ownership. Simultaneously, efforts towards full privatisation of select entities should continue, it said.
Fiscal Consolidation and Debt Management
Highlighting the economy’s current momentum, CII said India is at a pivotal stage in its growth journey, with real GDP expanding by a healthy 8 per cent in the first half of FY26 and inflation remaining well anchored.
“This ‘Goldilocks’ scenario of strong growth alongside price stability reflects the government’s proactive fiscal stance and prudent macroeconomic management,” CII noted.
At the core of its recommendations is strict adherence to the government’s debt glide path, which targets public debt at 50 ±1 per cent of GDP by FY31. Maintaining central government debt at around 54.5 ±0.2 per cent of GDP and the fiscal deficit at 4.2 ±0.1 per cent in FY27 would help preserve macroeconomic credibility while supporting growth.
CII added that strengthening public finances must extend beyond the Centre to states and urban local bodies, whose fiscal positions increasingly influence overall debt dynamics.
Institutionalising Fiscal Transparency
To enhance predictability and institutional credibility, CII called for reviving the Medium-Term Fiscal Framework with a rolling three- to five-year roadmap covering revenues, expenditure and debt.
The industry body also proposed institutionalising a Fiscal Performance Index to assess the quality of public finances across the Centre and states, linking performance to fiscal transfers. A Fiscal Stability Report should complement this framework by assessing risks from commodity price volatility, financial market fluctuations, climate shocks and other macroeconomic disruptions.
Strategy for Revenue Mobilisation
On revenue reforms, CII pointed out that India’s combined Centre and state tax-to-GDP ratio of 17.5 per cent remains below that of many major emerging economies.
“To meet the country’s developmental needs, India must raise its tax-GDP ratio,” said CII Director General Chandrajit Banerjee, stressing the need to leverage India’s digital public infrastructure to widen the tax base.
CII advocated greater use of digital and artificial intelligence-based tools to enable seamless data sharing between GST, income tax and digital payment systems. Linking tax returns with high-value transactions and deploying advanced analytics could help detect evasion in real time while lowering compliance costs.
Enhancing Expenditure Efficiency
Expenditure efficiency, particularly subsidy reform, forms the fourth pillar of CII’s strategy. The industry body flagged issues in the Public Distribution System (PDS), which currently covers around 813 million people, or 57 per cent of the population, citing outdated beneficiary data and leakages.
CII suggested updating beneficiary lists using the latest Household Consumption Expenditure Survey (2023–24), narrowing coverage to the bottom 15 per cent of the population, and gradually transitioning to cash or voucher-based transfers to improve efficiency and encourage dietary diversification.
Subsidy Reforms: PDS and Fertilisers
On fertiliser subsidies, which account for nearly 39 per cent of total central subsidies, CII recommended a shift to a Direct Benefit Transfer (DBT) mechanism to curb misuse and promote balanced fertiliser use. Providing DBT payments or fertiliser coupons ahead of the sowing season would also ease farmers’ upfront cost burdens.
Consolidating Central Schemes
CII further called for consolidation of Centrally Sponsored Schemes, which account for about 11 per cent of central government expenditure. Concentrating resources on high-impact sectors such as education, health, skilling and climate resilience, supported by digital monitoring tools, could improve outcomes while generating fiscal savings.