On Saturday, Finance Minister Nirmala Sitharaman presented the Union Budget for FY26, marking her eighth consecutive budget presentation. The budget outlines several crucial fiscal policies and economic targets, setting the stage for the nation’s financial strategy over the next fiscal year.
Fiscal Deficit and Economic Targets
A major highlight of the budget was the projection of a fiscal deficit for FY25 at 4.8% of GDP, revised from 4.9% earlier. The government has set an ambitious target to reduce this deficit further to 4.4% of GDP for FY26, as part of its ongoing fiscal consolidation efforts. This marks a focused attempt at controlling government expenditure while fostering growth in critical sectors.
Capital Expenditure Adjustments
Capital expenditure for FY25 has been revised downward to Rs 10.18 lakh crore from the previous estimate of Rs 11.11 lakh crore. While this reduction reflects a shift in expenditure strategy, it continues to prioritize infrastructure development and long-term economic goals.
Borrowing and Debt Management
The government has revised its borrowing targets upwards, with a gross borrowing target of Rs 14.82 lakh crore for FY26, a 5.7% increase from the previous target of Rs 14.01 lakh crore. This rise reflects the need to maintain liquidity while balancing fiscal responsibilities and public investment.
Direct Tax Receipts and Revenue Generation
The total receipts for FY26, excluding borrowings, are pegged at Rs 31.47 lakh crore, with direct tax receipts contributing Rs 25.57 lakh crore. This reflects a stable revenue base, indicating that direct taxes continue to play a significant role in government revenue generation.
Nominal GDP Growth
The government has set a nominal GDP growth target of 10.1% for FY26, slightly surpassing the 9.7% growth achieved in the previous fiscal year. This optimistic forecast suggests confidence in India’s economic recovery and growth potential.
Asset Monetisation and Disinvestment Plans
A major announcement in the budget was the launch of an asset monetisation plan for 2025-2030. The plan aims to raise Rs 10 lakh crore, which will be invested in new projects. The government has also set a target of Rs 50,000 crore in miscellaneous capital receipts for FY25, bolstered by proceeds from disinvestment and asset monetisation.
