ECONOMIC STABILISATION FUND

NEWS: The Lok Sabhaà passed the Centre’s Second Supplementary Demand for Grants, allowing them government to spend additional money. A key feature of this spending is the creation of an Economic Stabilisation Fund (ESF)

Economic Stabilisation Fund (ESF)

• Economic Stabilisation Fundà Provides fiscal space to the government to manage economic crises.
• The government has set aside ₹57,381 crore for an Economic Stabilisation Fund.

Purpose of the Fund

The fund will help the government respond to global economic shocks and uncertainties, such as:

• High crude oil prices (e.g., $100 per barrel oil shock)
• Energy shortages
• Supply chain disruptions
• Global conflicts (e.g., West Asia tensions)
• Unexpected shocks to sectors of the Indian economy

SIGNIFICANCE

• The fund is designed to provide “fiscal headroom”àfinancial flexibility for the government.

Helps India respond quickly to:

• Global economic crises
• Energy price shocks
• Supply chain disruptions
• Sector-specific economic shocks