Institutional reforms, fiscal consolidation key to maintain India's growth momentum: CII

New Delhi, Dec 25 (PTI) Industry body CII on Thursday urged the government to push institutional reforms and fiscal consolidation in the forthcoming budget to maintain India's growth momentum.

These suggestions formed part of the strategy outlined by the Confederation of Indian Industry (CII) for strengthening India's macroeconomic stability, based on key pillars including debt sustainability, fiscal transparency, revenue mobilisation and expenditure efficiency.

"India has achieved a rare convergence of high growth, low inflation, and improving fiscal indicators. The next Union Budget must continue this momentum through disciplined fiscal management and deeper institutional reforms," said Chandrajit Banerjee, Director General, CII.

Finance Minister Nirmala Sitharaman is expected to present the Union Budget for 2026-27 in the Lok Sabha in February.

The CII also suggested to the government to deploy advanced analytics tools to detect tax evasion, arguing the country needs to increase its tax-GDP ratio from 17.5 per cent (centre and states combined) currently.

"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 the tax base," added Banerjee.

Linking tax returns with high-value transactions and deploying advanced analytics can enable real-time detection of evasion while lowering compliance costs, CII stated.

To ensure debt sustainability, the industry lobby stressed adherence to the government's debt glide path targeting 50 ±1 per cent of GDP by FY31.

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

A Fiscal Performance Index should be institutionalised to assess the quality of public finances across the Centre and States and link performance to fiscal transfers, encouraging prudent and reform-oriented states, CII said.

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

As an interim measure, it recommended undertaking calibrated disinvestment, gradually reducing government stake in PSEs to 51 per cent, retaining majority ownership, and eventually to 26-33 per cent over time.

Parallelly, efforts at full privatisation should continue, as per CII.

Expenditure management, particularly subsidy reform, forms the other pillar of the strategy suggested by CII.

Public Distribution System (PDS), covering 813 million people or 57 per cent of the population, faces challenges of outdated data and leakages, it said.

The industry lobby called for prioritising high-impact areas such as education, health, skilling, and climate resilience, while leveraging digital tools for monitoring, which can yield better outcomes and fiscal savings. PTI RSN DRR