India’s government is deploying a broad mix of fiscal, trade, and regulatory strategies, including the creation of an Economic Stabilisation Fund, to shield the economy from global volatility and ensure stability across public finances, exports, and investment flows.
India’s government has said it is using a broad mix of fiscal, trade and regulatory measures to cushion the economy against global volatility, as New Delhi seeks to preserve stability in public finances, exports and investment flows. In a written reply to the Lok Sabha on Monday, minister of state for finance Pankaj Chaudhary said fiscal buffers, including a newly created Economic Stabilisation Fund, would give the state room to respond to external shocks and unexpected events.
The stabilisation fund was proposed in March as a way of creating extra fiscal headroom for India in the event of supply chain disruptions, energy shocks or other international disturbances, according to Business Standard. Alongside that buffer, the government has also moved to support exporters and industry through measures including the RELIEF scheme, the Bharat Maritime Insurance Pool, restoration of RoDTEP benefits, targeted customs duty relief and the Emergency Credit Line Guarantee Scheme 5.0, Chaudhary said.
The maritime insurance pool, approved by the cabinet and later described as a domestic cover with a sovereign guarantee of ₹12,980 crore, was designed to reduce reliance on foreign insurers and keep protection in place for Indian shipping interests during periods of global tension. Government and bank material also indicate that ECLGS 5.0 was aimed at providing extra liquidity to eligible borrowers hit by West Asia-related disruptions, including small firms and airlines.
Chaudhary said the government is also working to deepen trade links through free trade agreements and broader economic partnership pacts, while maintaining an investor-friendly foreign direct investment regime. He added that Reserve Bank of India steps such as liberalising external commercial borrowing rules, easing foreign investment processes and encouraging local-currency settlement are intended to strengthen external sector resilience. On taxes, he said compliance has been simplified for micro, small and medium-sized enterprises through GST thresholds, the composition scheme, quarterly returns for firms with turnover of up to Rs 5 crore and digital income tax systems such as e-filing, pre-filled returns and faceless assessment.
The minister also pointed to signs of household resilience, saying RBI data showed net household financial savings rising from Rs 13.9 lakh crore in 2022-23 to Rs 21.5 lakh crore in 2025-26. Retail participation in markets has also expanded sharply, with demat accounts reaching about 22.5 crore by end-March 2026, while the RBI’s Financial Stability Report for June 2026 said household finances remained sturdy, supported by better borrower profiles and strong repayment behaviour.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
