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Finance Minister Nirmala Sitharaman is set to present her record ninth consecutive Union Budget on Saturday, with markets and industry closely tracking fiscal consolidation and customs reforms. Continuing with recent tradition, the Budget will be presented in a paperless format, a practice followed over the past four years. Sitharaman had marked her first Budget in 2019 by replacing the colonial-era briefcase with a traditional red-cloth-wrapped bahi-khata.
Fiscal Deficit, Capex Under Focus
Among the most closely watched numbers will be the fiscal deficit, budgeted at 4.4 per cent of GDP for FY26. With the government having met its target of keeping the deficit below 4.5 per cent, attention will now shift to whether a clear fiscal deficit projection—possibly around 4 per cent, will be outlined for FY27, along with signals on reducing the debt-to-GDP ratio. Capital expenditure is another key focus area. The government has budgeted ₹11.2 lakh crore for FY26 and is expected to raise the capex target by 10–15 per cent, potentially taking it beyond ₹12 lakh crore, as private investment remains cautious.
Borrowings, Debt And Tax Outlook
Markets will also scrutinise the government’s borrowing programme, pegged at ₹14.8 lakh crore for FY26, as well as the debt consolidation roadmap from FY27 onwards. The general government debt-to-GDP ratio stood at 85 per cent in 2024, significantly above the 60 per cent target. On the revenue side, gross tax collections for FY26 are estimated at ₹42.7 lakh crore, driven by ₹25.2 lakh crore from direct taxes and ₹17.5 lakh crore from indirect taxes. GST collections are projected to rise 11 per cent to ₹11.78 lakh crore.
Nominal GDP growth projections for FY27 will also be in focus, as they will indicate the government’s inflation outlook. Estimates suggest nominal GDP growth could be pegged between 10.5 and 11 per cent. Spending on key schemes, along with allocations for health and education, will round out the Budget’s key takeaways.
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