1st February 2026: The Union Budget for 2026–27 transfer focus on fiscal discipline while maintaining strong support for economic growth through capital spending. Presenting the budget in Parliament, Finance Minister Nirmala Sitharaman said the gap between government debt and GDP has narrowed significantly, a development seen as positive for long-term economic stability.
For FY 2026–27, the fiscal deficit has been estimated at 4.3% of GDP. The government plans to spend ₹12.2 lakh crore on capital expenditure, reflecting its continued emphasis on infrastructure, industrial expansion, and long-term development projects that can generate employment and boost productivity.
On the revenue side, the Centre earned ₹35.33 lakh crore through revenue receipts and ₹18.14 lakh crore through capital receipts. Tax collections alone contributed ₹26.7 lakh crore, indicating steady improvement in revenue mobilisation. Total revenue expenditure has been pegged at ₹41.25 lakh crore, balancing welfare needs with fiscal prudence.
Looking ahead, the government has outlined more ambitious spending plans. Total expenditure in FY 2026–27 is projected to rise to ₹53.5 lakh crore, while the fiscal gap in absolute terms is expected to be around ₹36.5 lakh crore. To meet this requirement, the government plans to raise funds from the market, a conventional approach to managing fiscal deficits.
The budget also highlights increased support for states. Based on the recommendations of the 16th Finance Commission, the Centre will transfer ₹1.4 lakh crore to state governments in 2026–27. This funding will primarily support rural and urban development, including roads, education, healthcare, and infrastructure, strengthening growth at the local level.
