Fiscal deficit cut to 4.3 per cent in Budget 2026-27 as govt sticks to stable growth path

New Delhi: Finance Minister Nirmala Sitharaman on Sunday projected a further reduction in the fiscal deficit to 4.3 per cent of GDP for 2026-27 as the government continues on the path of fiscal consolidation to ensure economic growth with stability.

Presenting the Budget 2026-27, she said that the government had fulfilled its commitment to reduce the fiscal deficit to 4.4 per cent in the Budget for 2025-26 and would now reduce it further to 4.3 per cent as it continues on the fiscal prudence path.

FM Sitharaman said that the target reflects a balance between supporting economic momentum and keeping public finances stable. The fiscal deficit represents the gap between the government’s total expenditure and its total revenue.

She said that the government would go for net borrowing of Rs 11.7 lakh crore in FY27 from dated securities to fund its fiscal deficit, while the gross market borrowing is pegged at Rs 17.2 lakh crore.

The Finance Minister also said that India’s debt-GDP ratio has come down to 56.1 per cent in 2025-26 and would be further reduced in the Budget for 2026-27 to 55.6 per cent.

The decline in the debt-GDP ratio will reduce the Government’s outgo on interest payments, which will help to keep a lower fiscal deficit and free up resources for development, she said.

The Finance Minister announced capital expenditure of Rs 12.2 lakh crore in the Budget for 2026-27, to boost big-ticket infrastructure projects for boosting growth and jobs in the economy.

This represents an increase of 2.2 lakh crore over the corresponding figure of the previous fiscal year.

The Finance Minister said that an Infrastructure Risk Development Fund would be set up to accelerate the development of big projects.

She said to push economic growth, the Budget proposes to deliver a powerful push to infrastructure, including highways, ports, railways and power projects, scale up manufacturing in 7 strategic sectors and create champion MSMEs.

She further stated that the government has maintained fiscal prudence and monetary stability whilst maintaining a strong thrust on public investments

India must be deeply integrated with global markets, exporting more and attracting foreign investment as well, Sitharaman stressed.

IANS