Govt ready with Rs 1 lakh crore fund to tackle global headwinds

NEW DELHI: Amid the uncertainty caused by the conflict in West Asia, finance minister Nirmala Sitharaman on Friday announced a plan to set up a Rs 1 lakh crore Economic Stabilisation Fund (ESF), aimed at providing fiscal headroom to respond to challenges.

“ESF will help India (deal) with global headwinds such as the recent crisis, unanticipated supply chain disruptions, unexpected shocks to sub-sectors in the economy and any other event that may have significant fiscal implications. So, in anticipation of what cannot be anticipated, we are coming up with (this),” Sitharaman told Lok Sabha as she outlined govt’s steps to tackle the current crisis, while slamming the Opposition for creating doubts among the people. Govt will fund ESF through a combination of fresh cash outlays of Rs 57,381 crore this year and through internal reallocation in the coming years.

Economists are suggesting that govt will have to earmark more funds for oil and fertiliser subsidies in case the war persists and supply disruptions continue. It is also expected to push up inflation and there are demands from exporters for additional support to tide over the challenges.

She assured the House that there will be no shortfall in fertilizer subsidy. “For fertiliser subsidy, there will be no shortage. There is (enough) provision for all farmers in this supplementary demand. An additional Rs 19,200 crore is being granted for this, so there is no shortage of any kind for farmers,” said Sitharaman, while replying to the debate on the second batch of supplementary demands for grants.

Lok Sabha cleared the supplementary demand for grants of Rs 2.8 lakh crore, which involves an additional cash outgo of Rs 2 lakh crore.

FM also secured approval for Rs 23,641 crore for the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) to ensure food security for the vulnerable, along with Rs 41,400 crore for defence services, while maintaining that the new spending will not push the fiscal deficit beyond govt’s target.

“There is no increase in expenditure beyond the BE of 2025-26 due to the second supplementary demand for grants,” she said.

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