One of the CII’s key recommendations was to unlock value from public assets. It said the government should announce a three-year privatisation pipeline for Public Sector Enterprises (PSEs) in non-strategic sectors, as outlined in the ‘Strategic Disinvestment Policy’.

As an interim measure, CII recommends calibrated disinvestment, gradually reducing the government stake in PSEs from 51 per cent to 26-33 per cent over time, while retaining majority ownership. Parallely, efforts at full privatisation should continue, as per CII.

“India stands at a pivotal juncture in its growth journey. With real GDP expanding by a healthy 8% in the first half of FY26 and inflation remaining well anchored, the economy is displaying what the RBI has aptly termed a ‘Goldilocks’ scenario of strong growth coexisting with price stability. This favourable alignment reflects the government’s proactive fiscal stance and prudent macroeconomic management, CII said.

At the core of CII’s recommendations is adherence to the government’s debt glide path, which targets public debt at 50+-1 per cent of GDP by FY31.

Maintaining Central debt at roughly 54.5+-0.2 per cent of GDP and the fiscal deficit at 4.2+-0.1 per cent of GDP in FY27 will preserve macro credibility while supporting growth. Strengthening public finances, however, must extend beyond the Centre to States and Urban Local Bodies (ULBs), whose fiscal positions increasingly shape overall debt dynamics and the durability of macroeconomic stability, it added.

Further, to enhance predictability and institutional credibility, CII recommended reviving the Medium-Term Fiscal Framework with a rolling three- to five-year roadmap covering revenues, expenditures and debt.

“A Fiscal Performance Index should be institutionalised to assess the quality of public finances across the Centre and States and link performance to fiscal transfers, encouraging prudent and reform-oriented states. A Fiscal Stability Report should complement this, which assesses risks from commodity price volatility, financial volatility, climate shocks, and other macroeconomic disruptions. Such tools would allow policymaking to move from reactive to anticipatory, creating a more resilient fiscal architecture," it said.

On revenue mobilisation, CII noted that India’s combined Centre and State tax-to-GDP ratio, at 17.5 per cent, remains below that of many major emerging economies.

“To finance the developmental needs of the country, India needs to increase its tax-GDP ratio. Leveraging the data from India’s world-class digital infrastructure could help detect tax evasion and expand the tax base," said Chandrajit Banerjee, Director General, CII.

CII also advocated greater use of digital and artificial intelligence-based tools to enable seamless data sharing among GST, income tax, and digital payment systems.

Greater use of digital and AI-based tools should be leveraged to expand the tax base through seamless data exchange between GST, income tax, and digital payment systems. Linking tax returns with high-value transactions and deploying advanced analytics can enable real-time detection of evasion while lowering compliance costs, it said in its budget recommendation.

Expenditure efficiency, particularly subsidy reform, forms the fourth pillar of CII’s strategy.

Further elaborating, the CII said, the Public Distribution System (PDS), which covers 813 million people or 57 per cent of the population, continues to face issues related to outdated beneficiary data and leakages.

It said the efficiency can be improved by updating beneficiary lists using the latest Household Consumption Expenditure Survey (2023-24), narrowing coverage to the bottom 15 per cent of the population, and gradually shifting to cash or voucher-based transfers, which would also encourage dietary diversification.

On fertiliser subsidies, which account for 39 per cent of total central subsidies, CII recommended a transition to a Direct Benefit Transfer (DBT) system to curb misuse and promote balanced fertiliser application. Providing DBT payments or fertiliser coupons ahead of the sowing season would help ease farmers’ upfront cost concerns.

CII also called for consolidating Centrally Sponsored Schemes (CSS), which account for about 11 per cent of central government expenditure, to reduce fragmentation. Focusing resources on high-impact sectors such as education, health, skilling and climate resilience, supported by digital monitoring tools, could improve outcomes while generating fiscal savings.