CII On Indian Economy: Confederation of Indian Industry (CII) Director Chandrajit Banerjee on Sunday said India is moving ahead rapidly amid the slowdown in the global economy due to prudent fiscal management by the government for macroeconomic stability.

Elaborating on CII's suggestions for the upcoming Union Budget, he said fiscal management has maintained the right balance between fiscal deficit and fiscal support for growth. This has provided macroeconomic stability to the economy and helped strengthen the economy in an environment of global economic uncertainty.

CII gave these suggestions

Looking at next year's budget, CII has suggested sticking to the fiscal deficit target of 4.9 percent of GDP for FY25 and 4.5 percent for FY26. However, CII has also pointed out that overly aggressive targets beyond the mentioned targets can adversely impact growth.

CII has also welcomed the announcement in the Union Budget 2024-25 to keep the fiscal deficit at a level that helps reduce the debt-GDP ratio. CII suggested that the upcoming budget could pave the way for the central government debt to reach 50 percent of GDP by FY 2030-31 and 40 percent in the long term.

What did CII say about fiscal management?

CII has made three suggestions to motivate states toward prudent fiscal management. First, states can be encouraged to set up state-level fiscal sustainability reporting. Second, following the recommendations of the 12th Finance Commission, states have been allowed to borrow directly from the market. States also provide state guarantees in case of borrowing by public sector enterprises, which has an impact on the fiscal health of the state.

Third, the central government could create an independent and transparent credit rating system for states to encourage them to maintain prudent fiscal management. The ratings of states could be used to grant them greater autonomy in deciding how to borrow and spend.