Fiscal Deficit Target of 4.4% Remains Unchanged Amid Second Supplementary Budget and Global Economic Uncertainty

India's Fiscal Deficit to Remain Within Budget Target

The government has announced that the fiscal deficit for the current financial year will remain within the budget target of 4.4% of GDP, despite additional expenditure. According to Finance Minister Nirmala Sitharaman, the government's commitment to the fiscal deficit, including the second supplementary, will be within the target presented on February 1.

The government has sought Parliament's approval for gross additional expenditure of over Rs 2.81 lakh crore in the current financial year through the supplementary demand. Sitharaman stated that India's macroeconomic framework has strengthened in recent years, enabling the country to absorb global economic shocks while continuing on the fiscal consolidation path.

The government is creating the Economic Stabilisation Fund (ESF) to provide fiscal space for responding to unexpected global disruptions, such as geopolitical crises and supply chain shocks. The fund will have a total outlay of Rs 1 lakh crore, with Rs 59,000 crore being sought under the supplementary demands. An additional Rs 42,618 crore will be added through savings from other ministries and departments.

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India's Fertiliser Stock and Production Capacity

India has a fertiliser stock of approximately 163 lakh metric tonnes, which is adequate for the upcoming kharif season. The government is making additional allocations to prepare for fertiliser demand during the rabi season of December 2026–January 2027. The government has also set up six new urea units with a combined capacity of 76.2 lakh metric tonnes and will add an additional 25.4 lakh metric tonnes of capacity with two new units in Odisha.

The supplementary demands include additional net cash outgo approvals for fertiliser and food subsidies amounting to Rs 15,000 crore and Rs 23,640 crore, respectively. The government is taking steps to expand domestic fertiliser production capacity, including the establishment of new urea units and additional capacity in Odisha.