Budget Focuses on Containing Fiscal Deficit at 4.3 Pc in FY27
In line with the new fiscal prudence path of debt consolidation, the fiscal deficit in BE 2026-27 is estimated to be 4.3 per cent of GDP
Chennai: The Budget chose to stick to the path of fiscal consolidation and pegged the fiscal deficit for FY27 at 4.3 per cent against 4.4 per cent of the current financial year. Despite increasing the public capex by just Rs 1 lakh crore, the gross market borrowings are estimated to go up to Rs 17.2 lakh crore in FY27 against Rs 14.82 lakh crore in FY26.
“In line with the new fiscal prudence path of debt consolidation, the fiscal deficit in BE 2026-27 is estimated to be 4.3 per cent of GDP. I am happy to inform this august House that I have fulfilled my commitment made in FY 2021-22 to reduce the fiscal deficit below 4.5 per cent of GDP by 2025-26. In the Revised Estimate of 2025-26, the fiscal deficit has been estimated at par with the Budget Estimate of 2025-26 at 4.4 per cent of GDP,” Finance Minister said in her speech.
The government would target reaching a debt-to-GDP ratio of ‘50 plus or minus one per cent’ by 2030-31. In line with this, the debt-to-GDP ratio is estimated to be 55.6 per cent of GDP in BE 2026-27, compared to 56.1 per cent of GDP in RE 2025-26. A declining debt-to-GDP ratio will gradually free up resources for priority sector expenditure by reducing the outgo on interest payments, she said.
In BE 2026-27, the interest payments are estimated at Rs 14.04 lakh crore against Rs 12.76 lakh crore in BE 2025-26. Further, major subsidies at 1 per cent of GDP will be roughly 10 per cent of Revenue Expenditure in BE 2026-27.
Public capex will go up from Rs 11.2 lakh crore in BE 2025-26 to Rs 12.2 lakh crore in FY27.
In 2026-27, the non-debt receipts are estimated to go up to Rs 36.5 lakh crore against Rs 34 lakh crore in the revised estimate of FY26. The total expenditure is estimated to be Rs 53.5 lakh crore in FY27 against the RE estimate of Rs 49.6 lakh crore. The Centre’s net tax receipts are projected to be Rs 28.7 lakh crore against Rs 26.7 lakh crore in RE FY26.
In order to finance the fiscal deficit, in BE 2026-27, gross and net Market borrowings by the government through dated securities are budgeted at Rs 17.20 lakh crore and Rs 11.73 lakh crore, respectively, compared to Rs 14.82 lakh crore and Rs 11.54 lakh crore in BE 2025- 26. The net market borrowings from dated securities are estimated at Rs 11.7 lakh crore and the balance financing is expected to come from small savings and other sources.
