New Delhi, Dec 25 (NationPress) The leading business organization CII has put forth a four-pronged fiscal strategy in anticipation of the Union Budget for 2026-27, focusing on debt stability, fiscal transparency, revenue mobilization, and expenditure efficiency.

As highlighted in a CII announcement, the essence of this strategy lies in adhering to the government's debt glide path aimed at achieving 50 percent (with a margin of 1 percent) of GDP by FY31. Keeping the Central debt at approximately 54.5 percent of GDP and the fiscal deficit at 4.2 percent of GDP in FY27 will help maintain macroeconomic credibility while fostering growth. It's essential to enhance public finances not only at the Centre but also at the State and Urban Local Body (ULB) levels, as their fiscal health increasingly influences overall debt dynamics and the sustainability of macroeconomic stability.

In the second point, CII advocates for the revival of the Medium-Term Fiscal Framework, which would establish a rolling roadmap spanning 3-5 years for revenue, expenditure, and debt, enhancing predictability and institutional trust.

Thirdly, revenue mobilization is crucial for long-term fiscal viability. Currently, India's tax-to-GDP ratio is at 17.5 percent (combined for both central and state), which is lower than other major emerging economies.

“To address the country's developmental needs, India must elevate its tax-GDP ratio. Utilizing data from India's advanced digital infrastructure can help identify tax evasion and broaden the tax base,” stated CII's director general, Chandrajit Banerjee.

Utilizing digital and AI-driven tools can facilitate tax base expansion through seamless data integration between GST, income tax, and digital payment systems. By connecting tax returns to high-value transactions and applying advanced analytics, real-time detection of evasion can be achieved while reducing compliance costs, as stated.

To extract value from public assets, the government should unveil a three-year privatization plan for Public Sector Enterprises (PSEs) in non-strategic sectors, as outlined in the Strategic Disinvestment Policy.

Finally, the fourth pillar of the strategy focuses on expenditure management, particularly in reforming subsidies. The Public Distribution System (PDS), which serves 813 million people or 57 percent of the population, is challenged by outdated data and inefficiencies. By updating beneficiary lists using the latest Household Consumption Expenditure Survey (2023–24), refining coverage to the lowest 15 percent, and transitioning to cash or voucher-based transfers, efficiency can be improved while promoting dietary diversity.

Similarly, the fertiliser subsidy, which constitutes 39 percent of total central subsidies, should shift to a Direct Benefit Transfer (DBT) model to mitigate misuse and encourage balanced fertiliser usage. Issuing DBT funds or fertiliser coupons before sowing can alleviate farmers' concerns regarding upfront costs.

Centrally Sponsored Schemes (CSS), making up 11 percent of Central expenditure, also require consolidation to minimize fragmentation. Emphasizing high-impact sectors such as education, health, skilling, and climate resilience, while using digital tools for monitoring, could yield improved outcomes and fiscal savings.

Moreover, CII suggests motivating states to acquire ratings from at least two credible rating agencies for State Development Loans (SDLs) and linking part of the central capital expenditure aid to such ratings and disclosures to promote fiscal prudence.

Additionally, CII has proposed a Systematic Modernisation and Resource Transformation (SMART) Cities Enablement Mission anchored in a National Digital Urban Platform to enhance municipal finance, governance, and digital service delivery. A Fiscal Health Index for ULBs, modeled after NITI Aayog's index for states, would facilitate benchmarking, transparency, and reform-linked incentives, creating a virtuous cycle of improved finances and enhanced service delivery.