The FY27 Union Budget is broadly in line with expectations, reaffirming the government’s commitment to fiscal consolidation, continued focus on CAPEX, and continuity of reform efforts. The FY26 fiscal deficit (RE) is maintained at 4.4% of GDP, with rationalisation of revenue expenditure and stronger non-tax revenues offsetting tax collection shortfalls.

The FY27 Budget reflects continued commitment to fiscal consolidation, with the anchor shifting to the debt-to-GDP ratio. The Centre’s debt ratio is budgeted to decline from 56.1% in FY26 to 55.6%, alongside a fiscal deficit of 4.3% of GDP in FY27. Capital expenditure is budgeted to grow 11.5% YoY, remaining at ~3.1% of GDP in FY27. Elevated market borrowings may increase reliance on RBI OMOs to manage bond yields.

Policy priorities are anchored around three core kartavya—accelerating growth and resilience, building human capacity, and ensuring broad-based access aligned with Sabka Sath, Sabka Vikas. While reforms are broad-based, many initiatives are structural and medium-term, implying a lag before tangible growth, investment, and employment gains materialise.