What Nirmala Sitharaman said on LPG situation, fiscal deficit target, Economic Stabilisation Fund

Union Finance Minister Nirmala Sitharaman on Friday said the government will keep the fiscal deficit within the revised estimates for FY26, even as it brings the second batch of Supplementary Demands for Grants before Parliament.

Replying to a debate in the Lok Sabha, Sitharaman said the additional spending proposals would remain within the fiscal deficit target announced in the Union Budget for FY27.

She reiterated that the government remains committed to maintaining fiscal discipline and adhering to the fiscal consolidation roadmap.

Add Zee Business as a Preferred Source

Sitharaman said the fiscal reforms undertaken after the pandemic have strengthened India’s macroeconomic framework. According to her, these measures have helped the economy recover strongly and absorb global shocks without deviating from fiscal targets.

Economic Stabilisation Fund proposed

The finance minister also proposed the creation of an Economic Stabilisation Fund, aimed at providing additional fiscal capacity to deal with global economic shocks.

Sitharaman said the proposed fund would give the government fiscal headroom to respond to unexpected global developments such as supply chain disruptions, crises affecting key sectors, and other external shocks.

The fund is designed to help stabilise the economy during periods of global uncertainty similar to recent international crises.

“Economic stabilisation measures are being prepared in anticipation of unforeseen developments,” Sitharaman said while explaining the rationale behind the proposed fund.

Government monitoring global risks

The finance minister also referred to ongoing geopolitical tensions in West Asia and said global developments are creating certain challenges for India.

However, she said the government is taking necessary steps to ensure adequate financial resources are available to deal with such situations.

Sitharaman added that the government is prepared to handle issues such as supply chain disruptions and possible challenges related to energy supplies, including LPG.

She said India’s strengthened macroeconomic framework allows the country to respond to external shocks without compromising fiscal stability.

Supplementary demands explained

During her reply in the Lok Sabha, Sitharaman explained that up to three Supplementary Demands for Grants can be presented in a financial year under the constitutional framework.

However, she said the government has imposed a self-restriction to limit such demands to two in most cases.

According to the finance minister, supplementary budgets are an important instrument that allows the government to provide additional support to departments or states when necessary during the financial year.

At the same time, she said presenting supplementary demands should not be interpreted as a failure in the original budget estimates.

Instead, it provides flexibility to respond to evolving financial requirements of ministries and departments.

Assurance on FY26 fiscal deficit target

Sitharaman reiterated that the government will meet the fiscal deficit commitment announced in the Union Budget.

She assured members of Parliament that the additional spending through the second batch of Supplementary Demands for Grants will remain within the fiscal deficit target set for the year ending March 31, 2027.

“I would like to reiterate that we will in no way fail to fulfil the commitment made in the Budget,” Sitharaman said in the Lok Sabha.

She added that all assurances given in the House regarding the supplementary demands would remain consistent with the fiscal deficit target presented in Parliament on February 1, 2026.

No cut in fertiliser subsidy

The finance minister also clarified that the government will not reduce the allocation for fertiliser subsidies for farmers.

Sitharaman said the government will ensure that farmers continue to receive timely and adequate fertiliser subsidies.

According to her, the government remains committed to supporting the agriculture sector while maintaining fiscal discipline.