Union Budget 2026-27: FM Nirmala Sitharaman tables Rs 53.5 lakh crore Budget with fiscal deficit at 4.3% of GDP, no change in income tax slabs, strong capital expenditure push, and a clear roadmap for fiscal consolidation.
Finance Minister Nirmala Sitharaman on Sunday presented the Union Budget 2026-27 in Parliament, outlining a carefully calibrated roadmap for fiscal consolidation while sustaining high levels of public investment to support long-term economic growth. This marked her ninth consecutive Budget presentation and the first time a Union Budget was tabled on a Sunday.
The total size of the Budget for 2026-27 has been pegged at Rs 53.5 lakh crore, reflecting the government’s continued emphasis on infrastructure creation, capital expenditure, and macroeconomic stability amid global uncertainties. Importantly for taxpayers, the Finance Minister announced no change in income tax slabs, maintaining continuity and predictability in personal taxation.
Fiscal Deficit Target and Consolidation Strategy
Reaffirming the Centre’s commitment to fiscal discipline, Sitharaman pegged the fiscal deficit for 2026-27 at 4.3 per cent of Gross Domestic Product (GDP), marginally lower than the 4.4 per cent estimated for the current financial year. This reduction signals a gradual but steady approach towards fiscal consolidation without compromising growth priorities.
According to Budget documents, the government’s debt-to-GDP ratio is projected to decline to 55.6 per cent in 2026-27, down from 56.1 per cent in the revised estimates for 2025-26. Officials said this easing of the debt burden would help contain interest costs over time and create additional fiscal space for social and developmental spending.
The fiscal deficit for 2025-26 has been retained at 4.4 per cent of GDP in the revised estimates, indicating adherence to earlier projections and reinforcing policy credibility.
Revenue Projections and Spending Outlook
For the ongoing financial year 2025-26, non-debt receipts are estimated at around Rs 34 lakh crore, with net tax collections contributing approximately Rs 26.7 lakh crore. Total expenditure during the year is projected at about Rs 49.6 lakh crore, reflecting sustained government spending amid both domestic and global economic challenges.
Looking ahead to 2026-27, non-debt receipts are projected to rise to Rs 36.5 lakh crore, supported by improved tax buoyancy and economic expansion. Net tax receipts are expected to increase to Rs 28.7 lakh crore, while total expenditure is estimated at Rs 53.5 lakh crore, in line with the expanded size of the Budget.
Capital Expenditure Remains the Growth Engine
Capital expenditure continues to be a central pillar of the government’s growth strategy. For 2025-26, capital outlay is estimated at close to Rs 11 lakh crore, underscoring the government’s focus on infrastructure development, logistics, connectivity, and asset creation.
In the upcoming financial year, the Centre plans to maintain a strong capex push to crowd in private investment, stimulate job creation, and strengthen India’s productive capacity. Officials noted that sustained public investment is expected to have a multiplier effect on the economy over the medium term.
Borrowing Programme and Market Stability
To bridge the fiscal gap in 2026-27, the government plans net market borrowings of about Rs 11.7 lakh crore through dated securities. Gross market borrowings are estimated at Rs 17.2 lakh crore, with the remaining financing requirements to be met through small savings and other instruments.
The Finance Ministry said the borrowing programme has been carefully structured to support development priorities while ensuring stability in the debt market and avoiding undue pressure on interest rates.
Policy Vision and Tax Measures
Outlining the philosophical framework of the Budget, Sitharaman said it is anchored around three core “Kartavyas”: accelerating and sustaining economic growth, fulfilling the aspirations of the people, and ensuring equitable access to resources and opportunities under the vision of Sabka Vikas.
While income tax slabs remain unchanged, the Finance Minister announced that the New Tax Act will come into force from April 1, 2026, marking a major structural reform in India’s tax architecture aimed at simplification and long-term efficiency.
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In a significant move to position India as a global digital infrastructure hub, the Budget also proposed a tax holiday until 2047 for foreign companies offering global cloud services through data centres located in India.
Overall, the Union Budget 2026-27 seeks to strike a careful balance between fiscal prudence and growth imperatives, combining a steady consolidation path with sustained capital investment and long-term structural reforms.
