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Informist, Sunday, Feb. 1, 2026

 

--BUDGET: FY26 fiscal deficit seen 4.4% of GDP vs 4.4% of GDP Budget aim 

--BUDGET: FY27 fiscal deficit pegged at 4.3% of GDP 

--BUDGET: FY27 revenue deficit seen at 1.5% of GDP 

--BUDGET: FY27 primary deficit seen at 0.7% of GDP 

 

NEW DELHI - The Union Budget has pegged the fiscal deficit target for 2026-27 (Apr-Mar) at 4.3% of gross domestic product, while the deficit for FY26 was retained at 4.4% GDP. The government's medium-term fiscal consolidation roadmap concluded in FY26, and the fiscal goalpost will now shift to targeting the Central government's debt-to-GDP ratio.

 

At 4.3% of GDP, the fiscal deficit for FY27 is slightly higher than expectations. According to an Informist poll, economists and market participants expected the FY27 fiscal deficit target to be 4.2% of GDP. 

 

In absolute terms, the fiscal deficit for FY27 is estimated at INR 16.958 trillion, up from the revised estimate of INR 15.585 trillion for the current financial year. The Budget for FY26 had projected the fiscal deficit at INR 15.689 trillion. Data released Friday showed the fiscal deficit in the first nine months of FY26 was INR 8.558 trillion, accounting for 54.9% of the revised estimate.

 

Finance Minister Nirmala Sitharaman had announced a medium-term fiscal consolidation roadmap in the FY22 Budget, under which the fiscal deficit was to be brought below 4.5% of GDP by FY26 from a record high of 9.2% of GDP in FY21 as tax revenues fell sharply and expenses rose due to the COVID-19 pandemic. The government's fiscal deficit was 4.8% of GDP in FY25.

 

The government has said that from FY27 onwards, it will endeavour to keep the fiscal deficit each year such that the Centre's debt will be on a declining path as a percentage of GDP. The central government debt is seen at 55.6% of GDP in FY27, down from 56.1% in FY26. The government aims to lower its debt to 50% of GDP, plus or minus 1%, by March 2031.  

 

A portion of outstanding liabilities on the public account of India is due to national small savings fund investments in special securities issued by state governments, which would be repaid by the states at maturity, according to Budget documents. If this liability is excluded, the adjusted central government debt is estimated at 55.1% of GDP at the end of FY27.

 

The government's primary deficit – fiscal deficit excluding interest payments – is seen at INR 2.92 trillion in FY27, up 2.7% from the revised Budget estimate for FY26. As a percentage of GDP, however, the primary deficit is expected to moderate to 0.7% next year from 0.8% in FY26.

 

The revenue deficit is projected at INR 5.923 trillion for FY27, 12.4% higher than the revised Budget estimate for FY26. As a percentage of GDP, the revenue deficit is seen at 1.5% next financial year, the same as FY26.

 

The Budget projected net tax collections in FY27 at INR 28.669 trillion, up 7.2% from the revised estimate of INR 26.747 trillion. Total receipts, excluding borrowing, are pegged at INR 36.515 trillion, up 7.2% from the revised estimate of INR 34.064 trillion in FY26. The total expenditure in FY27 is projected at INR 53.473 trillion, up 7.7% on year from the revised estimate of INR 49.648 trillion.

The following table details the government's balance sheet (in INR billion):

 

	Budget Estimate FY27	Revised Estimate FY26	Budget Estimate FY26	Year-on-Year Change (%) Budget estimate vs Revised estimate
Revenue receipts	35,331.50	33,423.23	34,204.09	5.7%
Net tax revenue	28,669.22	26,746.61	28,374.09	7.2%
Non-tax revenue	6,662.28	6,676.62	5,830.00	-0.2%
Non-debt capital receipts	1,183.97	640.27	760.00	84.9%
Recovery of loans	383.97	301.9	290.00	27.2%
Other Receipts	800.00	338.37	470.00	136.4%
Total receipts	36,515.47	34,063.50	34,964.09	7.2%
Revenue expenditure	41,254.94	38,690.87	39,442.55	6.6%
Interest payments	14,039.72	12,743.38	12,763.38	10.2%
Capital expenditure	12,218.21	10,957.55	11,210.90	11.5%
Total expenditure	53,473.15	49,648.42	50,653.45	7.7%
Revenue deficit	5,923.44	5,267.64	5,238.46	12.4%
Revenue deficit (% of GDP)	1.5%	1.5%	1.5%	--
Fiscal deficit	16,957.68	15,584.92	15,689.36	8.8%
Fiscal deficit (% of GDP)	4.3%	4.4%	4.4%	--
Primary deficit	2,917.96	2,841.54	2,925.98	2.7%
Primary deficit (% of GDP)	0.7%	0.8%	0.8%	--

 

End

 

Reported by Shubham Rana

Edited by Saji George Titus

 

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