You could say the Ministry is holding the line. They have no intention of upping the ante on the borrowing programme for now, nor will you see any supplementary grant demands come before Parliament in the Monsoon Session. Those kinds of calls are being put off until the October review.
It is a way of conserving fiscal room while commodity prices are all over the place. The 2026-27 Union Budget was put together with enough of a cushion for the unknowns, so the Centre can handle a shock or two without having to go back to the market for more funds in a hurry, officials say.
Why the Centre is holding its nerve
Confidence comes down to two things: the flexibility already in the budget and some good non-tax inflows. The exchequer is being propped up by receipts from the side of disinvestment and land or asset monetisation, which is more than welcome.
Then there is the matter of miscellaneous capital receipts. There is an expectation of coming in well over the Rs 80,000 crore mark. That kind of headroom means there is less of a need to fiddle with the borrowing plan or make mid-year requests for grants, as one official put it.
On top of that, you still have the policy tools put in place to deal with the fallout from recent conflicts. We are talking about credit guarantees, stabilisation funds and some risk-pooling on insurance to give a bit of cover to the more exposed parts of the economy and keep the wider financial picture even-keeled.
Three external pressure points
If you ask officials, the economy is most open to the whims of the world when it comes to crude, gold and fertilisers. They are the ones that call for heavy outflows in foreign exchange, so any jolt in the international price can be felt at home.
They are being careful with gold. The government has its eye on the bullion but is not in the mood for a new Sovereign Gold Bond scheme just yet. They will wait for the global pricing and flows to make some sense before acting.
Fertilisers, however, are the thorn in the side. The Department of Fertilisers has made the case for doubling the Rs 1.77 lakh crore set aside in the Union Budget, pointing to the fact that they have to meet demand and make up for the high cost of imports.
Put simply, here is how they see the lay of the land:
– Crude oil: you are at the mercy of global surges
– Gold: we are in a wait-and-see mode, no SGB for now
– Fertilisers: a 100 per cent hike in the subsidy is on the table
Oil support was time-bound, price pain followed
There was a point after the war started when crude ran hot and the Centre put a soft underlay under the sector. For 78 days, the Finance Ministry put up roughly Rs 1.23 lakh crore for the oil marketing companies to muffle the impact.
But you can’t do that forever. The government didn’t have the wherewithal to keep it up, and the retailers were in no position to take the hit. Word is, fuel sellers were still down some Rs 650 crore a day against what the world was paying.
So as the help wound down, some of the cost had to be let through to the consumer. It is a sign of the times: when volatility runs up, you do a targeted, short-term fix rather than leave a subsidy on the table in perpetuity.
What the October review will decide
Come October, the ministry will have another look at its priorities. Before they think of any more moves for the rest of the year, they will have to factor in the revenue side of things, the subsidy bill and what is happening outside our borders.
Not moving on those extra grants in the Monsoon Session is part of that. If the non-tax side does well and the world calms down a bit, there is no reason to stray from the plan you have in front of you.
The idea for now is to make the most of what you have. Should the tab for fertilisers or oil get any steeper, the October review is where you will fine-tune the numbers, but without losing sight of the bottom line.
