- Fiscal deficit for 2026-27 estimated at 4.3% of India’s GDP, below 4.5% target
- Capital expenditure set at Rs 12.2 lakh crore, up from Rs 11.2 lakh crore this year
- Debt-to-GDP ratio expected to decline to 55.6% in 2026-27 from 56.1% in 2025-26
Finance Minister Nirmala Sitharaman on Sunday announced that the fiscal deficit for fiscal year 2027 is estimated at 4.3% of India's GDP, in line with the government's plan to bring down the deficit below 4.5% by 2025-26.
In the Budget for 2026-27, the Finance Minister also set a capital expenditure (capex) of Rs 12.2 lakh crore. This is an increase from the Rs 11.2 lakh crore set for the current financial year.
Sitharaman said the government remains focused on reducing the debt-to-GDP ratio, which is expected to be 55.6% of GDP in 2026-27, slightly lower than 56.1% in 2025-26. She explained that lower debt over time helps free up money for important sectors by reducing interest payments.
While presenting the budget, she said, "The government has been delivering on its fiscal commitments consistently without compromising on social needs. To strive towards accepted standards of fiscal management in Budget 2025-26, I had indicated that the Central Government would target reaching a debt-to-GDP ratio of 50% by 2030-31. In line with this, the debt-to-GDP ratio is estimated to be 55.6% of GDP in Budget Estimates (BE) 2026-27, compared to 56.1% of GDP in Revised Estimates (RE) 2025-26. A declining debt-to-GDP ratio will gradually free up resources for priority sector lending and expenditure by reducing the outgo on interest payments."
She added, "One of the main operational instruments for debt targeting is the fiscal deficit. I am happy to inform this August House that I have fulfilled my commitment made in 2021-22 to reduce the fiscal deficit below 4.5% of GDP by 2025-26. In RE 2025-26, the fiscal deficit has been estimated at par with BE 2025-26 at 4.4% of GDP. In line with the new fiscal prudence path of debt consolidation, the fiscal deficit in BE 2026-27 is estimated to be 4.3% of GDP."
While presenting the Budget in the Lok Sabha, she said that the government will continue to support the growth of Tier-2 and Tier-3 cities through infrastructure development. She also announced plans to set up a risk guarantee fund for the infrastructure sector.
In addition, a new scheme will be launched to improve construction and infrastructure equipment, which is expected to boost domestic manufacturing. The government will also help professional bodies such as The Institute of Chartered Accountants of India (ICAI) and Institute of Company Secretaries of India (ICSI) in creating short-term modular courses for skill development.
(With inputs from news agencies)
