Economic Stabilisation Fund will give fiscal headroom to allow India to respond to global headwinds: FM Sitharaman

Finance Minister Nirmala Sitharaman on Friday said the Rs 1 lakh crore Economic Stabilisation Fund will give fiscal headroom to allow India to respond to global headwinds.

Replying to the debate on the second batch of supplementary demands for grants in the Lok Sabha, she said the fund will act as a buffer to absorb shocks arising due to unforeseen global challenges like the current one in West Asia.

"The Rs 1 lakh crore Economic Stabilisation Fund will give fiscal headroom to allow India to respond to global headwinds," she said.


Through the second batch of supplementary demands, the government sought Lok Sabha approval for spending a gross Rs 2.81 lakh crore extra in the current fiscal year. With additional receipts of Rs 80,000 crore budgeted for the current fiscal year, the net additional cash spending will be Rs 2.01 lakh crore.

Sitharaman said the fiscal deficit for the current financial year (2025-26) will be within the Revised Estimates (RE).

In RE 2025-26, the fiscal deficit has been estimated at par with Budget Estimates of 2025-26 at 4.4 per cent of GDP.

"There is no increase in expenditure beyond the BE of 2025-26 due to the second supplementary," Sitharaman said, amid continuous sloganeering by Opposition members over LPG shortage concerns.

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 BE.

Till January, the government had spent Rs 36.90 lakh crore, according to Controller General of Accounts (CGA) data.

The supplementary demands for grants include grants spending towards setting up of an Economic Stabilisation Fund of Rs 1 lakh crore. Also, Parliament's nod has been sought for an extra spending of Rs 19,230 crore towards fertilisers' 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.Also Read: Opposition MPs submit notices in both Houses seeking motion for removal of CEC Gyanesh Kumar

“The Budget for 2026–27 clearly states the fiscal deficit target for the year ending March 31, 2027, and we will in no way fail to fulfil the commitment made in the Budget,” she said, adding that the assurances related to the supplementary demands would remain within the fiscal deficit target presented in Parliament on February 1, 2026.



She explained that up to three supplementary demands can be introduced in a year, but the government has restricted itself to two, describing it as a self-imposed discipline to avoid repeated revisions while retaining flexibility to address essential requirements of states and departments.

Allocations for defence, fertilisers and welfare schemes

The supplementary demands include additional allocations for several sectors. The government has proposed ₹41,822 crore for the Defence Ministry, ₹19,230 crore for fertiliser subsidies, and ₹23,641 crore for subsidies under the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY).

Addressing concerns about support for farmers, Sitharaman said adequate provisions have been made to ensure there is no shortage of fertilisers, noting that the fertiliser subsidy has been increased by 26%.

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She also said ₹95,000 crore has been allocated for VB-G RAM G from April 2026, while rejecting Opposition claims of inadequate funding for MGNREGA.

Defending the use of supplementary demands, Sitharaman said the provision allows the government to respond to unforeseen requirements without being inflexible, adding that it should not be interpreted as an indication that the original budget estimates were incorrect but rather as a mechanism to provide necessary support to departments when required.