Rapid Fire
Economic Stabilisation Fund
- 17 Mar 2026
- 3 min read
The Lok Sabha approved the 2nd batch of Supplementary Demands for Grants (2025-26), and the Finance Minister introduced the Economic Stabilisation Fund (ESF), a Rs 1 lakh crore fiscal buffer aimed at boosting macroeconomic stability and economic resilience.
- Under Article 115, Supplementary Demands for Grants are required when funds authorised by the Appropriation Act for a service prove insufficient. The President lays them before both the Houses of Parliament for approval before the financial year ends.
Economic Stabilisation Fund
- About: It is designed to act as a "financial shock absorber," protecting the Indian economy from global headwinds such as the West Asia conflict, oil price spikes and supply chain disruptions (e.g, Strait of Hormuz blockade) without breaching fiscal deficit targets.
- Funding Source: A net outgo of Rs 57,381.84 crore is sourced through supplementary demands, while the remainder comes from savings, recoveries, and higher receipts from various ministries.
- The fund will be placed under the reserve funds managed by the Department of Economic Affairs (DEA), Ministry of Finance.
- Fiscal Discipline: The government has emphasized that this allocation does not entail additional borrowing and will not impact the fiscal deficit target of 4.4% for 2025–26 (Revised Estimates).
- Global Comparison: The ESF draws parallels to Sovereign Wealth Funds or Stabilisation Funds in other economies, such as Norway (for oil price fluctuations) and Chile (for copper price shocks).
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