Finance Minister Nirmala Sitharaman is poised to present her record ninth consecutive Union Budget, a landmark achievement in India's fiscal history. As the world's fastest-growing major economy, India's budgetary allocations and projections are under intense scrutiny from global markets and domestic stakeholders alike. The Budget will be presented in a paperless format, continuing the eco-friendly tradition initiated in recent years. Notably, Sitharaman had, in her maiden Budget presentation in 2019, replaced the traditional leather briefcase with a red cloth-wrapped bahi-khata, symbolising a shift towards indigenous practices and modernisation.
Key Fiscal Indicators Under the Microscope
Investors, economists, and policymakers are keenly observing several critical numbers and signals in the Union Budget for 2025-26 and beyond. These figures will shape expectations regarding fiscal discipline, growth momentum, and policy support as India navigates a complex global economic environment.
Fiscal Deficit and Debt Management
The fiscal deficit for the current financial year (FY26) is budgeted at 4.4 per cent of GDP, as per recent reports. With the government successfully achieving its consolidation goal of maintaining the deficit below 4.5 per cent, all eyes are now on the guidance for FY27. Markets anticipate the government to indicate a deficit closer to 4 per cent of GDP in the upcoming year, alongside providing clarity on the medium-term debt reduction path. In her previous Budget speech, the finance minister emphasised that fiscal policy from 2026-27 onwards would aim to keep central government debt on a declining trajectory as a share of GDP. Markets will seek a clearer timeline on when general government debt-to-GDP could approach the 60 per cent target, given that general government debt stood at approximately 85 per cent of GDP in 2024, including central government debt of around 57 per cent.
Capital Expenditure Priorities
Capital spending remains a cornerstone of the government's growth strategy. Capex for FY26 is pegged at Rs 11.2 lakh crore. In the forthcoming Budget, the government is expected to continue prioritising infrastructure outlays, with a potential 10–15 per cent increase that could elevate capex beyond Rs 12 lakh crore. This emphasis is particularly crucial as private investment sentiment remains cautious, underscoring the government's role in driving economic expansion through public investment.
Borrowing Programme and Market Impact
Gross market borrowing for FY26 is estimated at Rs 14.80 lakh crore. The borrowing figure announced in the Budget will be meticulously analysed, as it signals the government's funding requirements, fiscal discipline, and potential influence on bond yields. A prudent borrowing strategy is essential to maintain macroeconomic stability and investor confidence.
Tax Revenue Projections
Gross tax revenue for 2025-26 has been estimated at Rs 42.70 lakh crore, implying an 11 per cent growth over FY25. This includes Rs 25.20 lakh crore from direct taxes—comprising personal income tax and corporate tax—and Rs 17.5 lakh crore from indirect taxes such as customs, excise duty, and GST. Goods and Services Tax collections for FY26 are projected to rise 11 per cent to Rs 11.78 lakh crore. Projections for FY27 will be closely monitored, especially as GST revenue growth is expected to accelerate following rate rationalisation measures implemented since September 2025.
Nominal GDP Growth Assumptions
Nominal GDP growth for FY26 was initially estimated at 10.1 per cent but has since been revised down to approximately 8 per cent due to lower-than-expected inflation, even as real GDP growth is pegged at 7.4 per cent by the National Statistics Office. The FY27 nominal GDP assumption—likely in the 10.5–11 per cent range—will offer insights into the government's inflation and growth outlook, shaping fiscal planning and resource allocation.
Spending Priorities and Social Schemes
Beyond the headline aggregates, the Budget will also be scrutinised for allocations to key social and development schemes, as well as spending on priority sectors such as health and education. These allocations reflect the government's commitment to inclusive growth and human capital development, which are vital for sustaining long-term economic progress.
Together, these budgetary components will delineate India's fiscal roadmap, influencing investor sentiment and economic strategies in the coming years. As Finance Minister Nirmala Sitharaman unveils her ninth Budget, the nation awaits a blueprint that balances growth aspirations with fiscal prudence in an evolving global landscape.
