Government Prepares ₹1 Lakh Crore Fund to Counter Global Economic Headwinds
Centre plans fiscal buffer to address supply disruptions, inflation risks and sectoral shocks amid rising geopolitical tensions.
India, Mar 14 : The Union government has proposed the creation of a ₹1 lakh crore Economic Stabilisation Fund (ESF) to help the country manage potential economic shocks triggered by global uncertainties. Union Finance Minister Nirmala Sitharaman announced the initiative in the Lok Sabha while outlining measures to address challenges emerging from the ongoing conflict in West Asia and global supply disruptions.
According to the finance minister, the fund will provide financial flexibility to respond to unexpected crises, including disruptions in supply chains, sudden shocks to specific sectors and other developments that could significantly impact the economy. She said the initiative aims to ensure that the government is prepared for unforeseen economic challenges.
The proposed ESF will be financed through a mix of fresh budgetary allocation and internal adjustments. The government plans to contribute ₹57,381 crore this year as part of the initial funding, with additional resources expected to come from reallocation in subsequent years.
Economists have warned that prolonged geopolitical tensions could push up inflation and force the government to increase spending on key subsidies such as fuel and fertilisers. Responding to concerns raised by lawmakers, Sitharaman assured that farmers would not face any shortage of fertiliser support. The government has approved an additional ₹19,200 crore towards fertiliser subsidies to ensure adequate supply.
The lower house of Parliament also cleared supplementary demands for grants amounting to ₹2.8 lakh crore, which includes an extra cash outgo of about ₹2 lakh crore. As part of the spending approvals, ₹23,641 crore has been allocated for the Pradhan Mantri Garib Kalyan Anna Yojana to maintain food security for vulnerable populations.
Another ₹41,400 crore has been earmarked for defence services. Sitharaman said the additional allocations would not push the fiscal deficit beyond the government’s target for the financial year 2025–26, maintaining that overall spending remains within the budget estimates.
The proposed stabilisation fund is intended to strengthen India’s capacity to manage economic volatility as global geopolitical developments continue to influence markets and trade flows.
