Union Finance Minister Nirmala Sitharaman is going to present her ninth consecutive Union Budget 2026-27 on 1 February 2026 (Sunday). This budget will be important for India, the world’s fastest growing major economy, where there will be a special focus on issues like customs reforms, fiscal consolidation and infrastructure push. In his first budget in 2019, the Finance Minister had started a new tradition by adopting ‘Bahi-Khata’ wrapped in red cloth instead of the traditional leather briefcase. Like the last several years, this budget will also be completely paperless.
Key figures that are very important
Before the presentation of the budget, markets, investors and economists are keeping an eye on these key economic data:
Fiscal deficit
Fiscal deficit for FY 2025-26 is targeted at 4.4% of GDP (with the possibility of achieving this as high as 4.3% in some estimates).
After achieving the target below 4.5% in FY2026, the focus is now on further cuts for FY2027.
Market Expectation: The government may announce a deficit target of between 4.0% to 4.4% for FY 2027, as well as give a clear strategy to reduce the debt-to-GDP ratio.
Capital expenditure
Capex for FY26 is set at Rs 11.2 lakh crore.
There is a strong possibility of continuing the emphasis on infrastructure in the next budget.
Estimates: Capex may increase by 10-15% or more, taking it to Rs 12 lakh crore or more.
With wage revision being proposed in FY28, there is currently scope for increasing capex, which will also encourage private investment.
debt reduction plan
It was announced in the 2024-25 Budget that the debt to GDP ratio will remain on a declining path from 2026-27.
Total government debt was 85% of GDP in 2024 (Centre’s share was 57%).
Market is curious: What timeline and strategy does the government offer for debt reduction after FY27? The target is to reach 50% (±1%) by 2030-31.
borrowing
Gross borrowing in FY26 is set at Rs 14.80 lakh crore.
The figure indicates the position of fiscal deficit financing, revenue collections and non-tax income.
Important for the market: The level and structure of borrowing (impact on the bond market).
tax revenue
Gross tax revenue in FY26 is estimated at Rs 42.70 lakh crore (~11% increase from FY25). This includes Direct Taxes (Income Tax + Corporate Tax): Rs 25.20 lakh crore, Indirect Taxes (GST, Customs, Excise): Rs 17.50 lakh crore, with special focus on tax buoyancy and customs reforms for FY27.
GST collection
GST estimated at Rs 11.78 lakh crore in FY26 (11% growth).
Collections expected to pick up in FY27 after tax rate cut (GST 2.0) from September 2025.
This is a major part of the revenue, so its estimation is important.
nominal gdp
The original estimate for FY26 was 10.1%, but due to low inflation the NSO revised it down to 8.0% (real GDP growth 7.4%).
The government is likely to project 10.5-11% nominal GDP growth for FY27, which will indicate inflation and growth trends.
Other Major Focus Areas Social Sector
Allocation on health, education and schemes like GRAM G.
Sectoral Priorities: Defence, Renewable Energy, Manufacturing, MSME, Employment Generation and Rural Development.
Overall, this budget will be a balance between growth and fiscal discipline, with the capex push continuing but deficit control remaining tight.
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