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Informist, Tuesday, Dec. 30, 2025

 

By Krity Ambey and Priyasmita Dutta

 

NEW DELHI – Prime Minister Narendra Modi met top Indian economists Tuesday ahead of the Budget for the financial year 2026–27 (Apr–Mar) to review the state of the economy and hear their policy recommendations. According to some economists who attended the meeting, foreign trade and exports emerged as the most discussed topics.

 

Noting the rise of protectionism globally, the economists suggested that India should focus on diversifying its services exports. "Our services exports are doing well, but there are other segments with immense potential--like tourism, we need to tap those," an economist told Informist.

 

Merchandise exports are likely to remain in risky territory next year, with the US having imposed 50% tariff on Indian goods and Mexico announcing a similar duty effective Jan. 1. Economists advised the government to continue emphasising merchandise exports, pursue trade deals with developed economies, and simultaneously prioritise growth in services exports. "Suggestions were also given to strengthen free trade agreement frameworks to boost exports," another economist who attended the meeting said.

 

Given the uncertain global trade and geopolitical environment, they also recommended boosting self-reliance in key sectors to prevent India from falling victim to trade weaponisation, citing China's restrictions on critical minerals as an example.

 

In the near term, the economists urged the government to maintain its push on capital expenditure in the Budget for FY27. India has nearly tripled its capital spending over the past five years. For FY26, the government's capital expenditure has been pegged at INR 11.21 trillion.

 

For the long term, they recommended encouraging research and development, strengthening the education sector to leverage India's demographic dividend, and preparing for structural reforms to support an ageing population.

 

The theme of the meeting was "Aatmanirbharta and Structural Transformation: Agenda for Viksit Bharat". At the meeting, Modi stressed the need for mission-mode reforms to build global capability and attain integration with the global economy. He stressed that India's policymaking and budgeting must remain anchored with the vision for 2047. He also spoke of the need to ensure that the country remains a vital hub for the global workforce and international markets.

 

Finance Minister Nirmala Sitharaman, Chief Economic Adviser to the Government V. Anantha Nageswaran, and NITI Aayog Vice-Chairperson Suman Bery were also present at the meeting.

 

According to one of the economists quoted earlier, discussions were also held on fiscal frameworks and household debt, with focus on long-term policy goals. "The meeting was not just to discuss what is needed immediately in the Budget but also for long-term growth perspective," the economist said. 

 

Fiscal pressures are already significant this year, with most key tax collections trailing the budgeted growth rates. On the expenditure side, front-loaded capital expenditure has resulted in the spending sharply overshooting the budgeted growth rate, but the government has kept revenue expenditure in check. It has projected the fiscal deficit at 4.4% of GDP in FY26, marking the final leg of fiscal consolidation.

 

The Budget for FY27 is also important to understand the next leg of the Centre's fiscal consolidation programme as it had announced in the Budget for FY26 that from FY27 onwards, the government will keep the fiscal deficit at a particular level each year such that the debt-to-GDP ratio is on a declining path. Its target for fiscal consolidation is that the Centre's debt is 50% of GDP, plus or minus 1%, by FY31. Government debt is projected to reach 56.1% of GDP at the end of FY26.  End

 

Edited by Rajeev Pai

 

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