Budget 2026: India sets FY27 fiscal deficit target at 4.3%
What's the story
The Indian government has announced a fiscal deficit target of 4.3% of the gross domestic product (GDP) for the financial year 2026-27. The announcement was made by Finance Minister Nirmala Sitharaman while presenting her ninth consecutive Union Budget in Parliament today. The estimate is in line with earlier projections and marks a continued effort toward fiscal consolidation amid higher capital expenditure to spur economic growth.
Financial projections
Debt-to-GDP ratio projected at 55.6% for FY27
Sitharaman also projected a debt-to-GDP ratio of 55.6% for FY27. This is a slight decrease from the current fiscal's 56.1%. The government's net market borrowing is pegged at ₹11.7 lakh crore while gross market borrowing stands at ₹17.2 lakh crore for the upcoming financial year. Non-debt receipts are estimated to be ₹36.5 lakh crore with net tax receipts expected to reach ₹28.7 lakh crore during this period, according to Sitharaman's budget speech today in Parliament.
Fiscal strategy
Government committed to fiscal discipline while ensuring growth-supportive spending
The government has reiterated its commitment to fiscal discipline while ensuring that growth-supportive spending continues. This emphasis on capital expenditure is aimed at improving the quality of expenditure by promoting long-term growth without putting undue pressure on public finances. Economists see this continued reduction in the fiscal deficit as vital for macroeconomic stability, keeping borrowing costs in check, and maintaining investor confidence amid volatile global financial conditions.
Past performance
Provisional fiscal deficit for FY25 pegged at 4.8% GDP
Provisional data for FY25 showed the fiscal deficit at 4.8% of GDP, broadly in line with revised estimates. The number was backed by strong tax revenue and a record RBI dividend transfer to the government. Additional government data pegged the fiscal deficit at ₹15.77 trillion, aided by an all-time high RBI dividend of ₹2.11 trillion during this period last year.