Union Budget 2026-27: CII outlines 4-point strategy for macroeconomic stability

NEW DELHI: Apex business chamber CII on Thursday proposed a four-pronged fiscal strategy ahead of the Union Budget 2026-27 that includes debt stability, fiscal transparency, revenue mobilization and expenditure efficiency.

According to a CII statement, at the core of the roadmap is adherence to the government's debt glide path targeting 50 percent (plus or minus 1 percent) of GDP by FY31. Maintaining Central debt at roughly 54.5 percent of GDP and the fiscal deficit at 4.2 percent of GDP in FY27 will preserve macro credibility while supporting growth. Strengthening public finances, however, must extend beyond the Centre to States and Urban Local Bodies (ULBs), whose fiscal positions increasingly shape overall debt dynamics and the durability of macroeconomic stability.

Second, to improve predictability and reinforce institutional credibility, CII recommends reviving the Medium-Term Fiscal Framework with a rolling 3-5 year roadmap for revenue, expenditure and debt.

Third, revenue mobilization remains central to long-term fiscal sustainability. India's tax-to-GDP ratio at 17.5 percent (centre and state combined) remains below that of major emerging economies.

"To finance the developmental needs of the country, India needs to increase its tax-GDP ratio. Leveraging the data from India's world-class digital infrastructure could help detect tax evasion and expand tax base," CII director general Chandrajit Banerjee said.

Greater use of digital and AI-based tools should be leveraged to expand the tax base through seamless data exchange between GST, income tax, and digital payment systems. Linking tax returns with high-value transactions and deploying advanced analytics can enable real-time detection of evasion while lowering compliance costs, the statement said.

To unlock value from public assets, government should announce a three-year privatization pipeline of Public Sector Enterprises (PSEs) in the non-strategic sectors as announced in the 'Strategic Disinvestment Policy, CII further stated.

Fourth, expenditure management, particularly subsidy reform, forms the other pillar of the strategy. Public Distribution System (PDS), covering 813 million people or 57 percent of the population, faces challenges of outdated data and leakages. Updating beneficiary lists using the latest Household Consumption Expenditure Survey (2023-24), narrowing coverage to the bottom 15 percent, and shifting towards cash or voucher-based transfers can enhance efficiency while also promoting dietary diversification, the statement said. (IANS)

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