Economic Stabilization Fund to help India tackle unexpected crises: Sitharaman
Finance Minister Nirmala Sitharaman said the proposed Rs 1 lakh crore Economic Stabilization Fund will help India respond to unexpected crises such as global conflicts and supply disruptions. The Lok Sabha approved supplementary demands for grants worth Rs 2.01 lakh crore
New Delhi: Finance Minister Nirmala Sitharaman on Friday said the Rs 1 lakh crore Economic Stabilization Fund will help in dealing with the impact of an unanticipated crisis like the ongoing conflict in West Asia.
Replying to a debate on the second batch of supplementary demands for grants in the Lok Sabha, Sitharaman lashed out at the Opposition for disrupting the House proceedings and said instead of standing together in the interest of the nation and giving confidence to the people, they were taking “irresponsible positions”.
Opposition members trooped into the well of the Lok Sabha, shouting slogans throughout the minister’s reply to the debate. Later, the supplementary demands for grants entailing an additional outgo of Rs 2.01 lakh crore were approved by the House by a voice vote.
“It is ironic that even while I am speaking about how the government is preparing itself to face unexpected events, including supply chain disruptions and issues related to LPG, the Opposition is not willing to listen to the reply. Instead, they prefer to pursue their own agenda,” she said.
The second batch of supplementary demands for grants provides for inter-account transfers of Rs 1 lakh crore for the creation of an Economic Stabilization Fund. As per the document, the net cash outgo towards this fund will be Rs 57,381.84 crore, and the remaining amount will come from savings.
Sitharaman said the government has strengthened its macroeconomic framework, which has helped India absorb economic shocks of various kinds without deviating from the fiscal consolidation roadmap.
“The Economic Stabilization Fund will provide fiscal headroom to allow India to respond to global headwinds such as the recent crisis, unanticipated supply chain disruptions, unexpected shocks to sub-sectors in the Indian economy and any other event that may have significant fiscal implications. So in anticipation of what cannot be anticipated, we are coming up with an Economic Stabilization Fund,” she said.
She also said the additional expenditure will not impact the fiscal deficit for the financial year 2025-26, which will remain within the Revised Estimates (RE).
In the RE of 2025-26, the fiscal deficit has been estimated at par with the Budget Estimates of 2025-26 at 4.4 per cent of GDP.
Rejecting the Opposition charge that bringing supplementary demands for grants shows “poor budgeting” by the government, Sitharaman said the argument was based on “flawed logic” and asked whether the government should not have brought the Economic Stabilization Fund in times of unforeseen challenges.
“Does the Opposition want the government not to make any provision for a developing emergency situation?” the minister asked.
She said that when the world is facing a crisis, it is necessary for all political parties to rise above party lines and support the government in dealing with the challenges coming from abroad.
“We must come together for the benefit of the country and speak in a way that gives hope and confidence to the people. It is unfortunate that some in the Opposition believe that their only role is to come into the Well of the House and shout slogans,” Sitharaman said.
The minister said Rs 95,000 crore has been allocated under the VB-G RAM G scheme for 2026-27. Besides, the second batch of supplementary demands for grants provides Rs 30,000 crore to clear the MGNREGA dues up to March 31, 2026.
The second batch of supplementary demands for grants provides 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 in the supplementary, the net additional cash spending will be Rs 2.01 lakh crore.
It includes grants for spending towards setting up an Economic Stabilisation Fund of Rs 1 lakh crore. Also, Parliament’s nod has been sought for extra spending of Rs 19,230 crore towards fertiliser 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.
Sitharaman said there will be no shortage of fertilisers for farmers, and adequate provision has been made in the supplementary demands for grants.
In the Revised Estimates for the current fiscal year, the government had cut total expenditure to Rs 49.65 lakh crore from Rs 50.65 lakh crore in the BE.
Till January, the government had spent Rs 36.90 lakh crore, according to Controller General of Accounts (CGA) data.
