The Indian government has dismissed concerns that the Middle East crisis could derail its fiscal plans, with official sources asserting that GDP momentum remains intact and there is no immediate need for extra borrowing, according to a report by the Times of India's Business Desk.
Fiscal Deficit Target and Borrowing Stance
The government continues to target a fiscal deficit of 4.3% of GDP for the current financial year (FY27), sources told news agency PTI. There is no proposal at present to seek supplementary grants or raise additional borrowing during the upcoming monsoon session of Parliament, they added. The FY27 Budget had already factored in global uncertainties, including tariff-related risks, according to the sources.
Subsidy Pressures and Energy Costs
While the fiscal stance remains steady, the Middle East crisis has increased pressure on subsidy and energy bills. The fertiliser ministry has sought a 100% increase in fertiliser subsidy allocation for the current fiscal, amid rising global fertiliser prices. The Budget had provided Rs 1.77 lakh crore towards fertiliser subsidy for FY27.
The government also extended support of Rs 1.23 lakh crore to oil marketing companies (OMCs) to keep petrol and diesel prices unchanged for 78 days after the outbreak of the West Asia crisis. After that period, OMCs have started increasing fuel prices in phases but are still incurring losses of around Rs 650 crore per day by selling fuel below prevailing international crude-linked costs, sources said.
GDP Momentum and High-Frequency Indicators
According to sources, the growth momentum seen in the January-March quarter of FY26 has continued into the first quarter of FY27, with no adverse impact on remittances so far. Key high-frequency indicators such as GST collections remain robust, private investment is gathering pace (citing recent data from CII), and overall domestic consumption is holding up.
The government plans to reassess macroeconomic conditions in July after receiving April-June quarter growth data and a clearer picture of the impact of El Nino on the monsoon.
Disinvestment and Asset Monetisation Plans
On the disinvestment front, a source said: "DIPAM and DPE have a year-long pipeline and also a medium-term outlook of disinvestment and asset monetisation. I would hope the budgeted Rs 80,000 crore under this head exceeds BE and both the departments are working on it." The source added that the IDBI Bank disinvestment will move ahead.
FDI and Reform Agenda
Stressing that the government's "reform express" will continue, sources said additional measures to attract foreign direct investment (FDI) are in the pipeline, and there is no proposal to curb capital outflows. The government remains committed to its structural reform agenda despite the external headwinds.
| Fiscal Metric | Value |
|---|---|
| Fiscal deficit target (FY27) | 4.3% of GDP |
| Budgeted fertiliser subsidy (FY27) | Rs 1.77 lakh crore |
| Support to OMCs (78 days) | Rs 1.23 lakh crore |
| OMCs daily losses (current) | ~Rs 650 crore |
| Budgeted disinvestment target (FY27) | Rs 80,000 crore |
Next Milestone
The government will reassess macroeconomic conditions in July after the release of April-June quarter GDP data and monsoon impact assessment.
Sources:
