Union Budget 2026: FAQs, key numbers, and themes to watch

In her first Budget in 2019 Sitharaman replaced the decadesold leather briefcase with a traditional red lsquobahikhatarsquo symbolising a shift in presentation style Continuing the practice of recent years the Union Budget 2026ndash27 will be paperless marking the fifth consecutive digital BudgetUnion Budget 2026 Assessing Indiarsquos current financial health ahead of FY27India heads into Union Budget 2026 at a moment of relative strengthmdashbut with limited room for error The macroeconomic backdrop remains supportive though increasingly fragile amid global uncertaintiesEconomic growth is holding firm The Economic Survey projects real GDP growth of 68ndash72 per cent in FY 2026ndash27 a moderation from the 74 per cent estimated for the current year yet still among the fastest growth rates globallyThe governmentrsquos fiscal stance remains calibrated The fiscal deficit stood at 48 per cent of GDP in FY25 and is targeted at 44 per cent in FY26 even as public investment continues to play a central role in sustaining growthCapital expenditure remains a key anchor Budgeted capex for FY26 stands at Rs 1121 lakh crore while effective capexmdashincluding grants for asset creationmdashreaches Rs 1548 lakh crore reinforcing the governmentrsquos infrastructureled growth strategyInflation has eased significantly averaging 17 per cent between April and December 2025 providing policymakers with some headroom However external pressures persist with exports facing global trade frictions keeping the focus firmly on domestic demand and public investmentWhile domestic demand remains resilient global headwinds are intensifying Rising US tariffs and sluggish global growth have weighed on exports while private investment continues to remain cautiousAs a result economists expect the government to continue leaning on public spending particularly in sectors such as roads ports energy and defence even as it remains committed to fiscal consolidation Capital expenditure is likely to rise further alongside a gradual lowering of the fiscal deficit targetHere are the key numbers and themes to watch in the Union Budget for FY 2027Fiscal deficitThe budgeted fiscal deficit for the current financial year FY26 April 2025ndashMarch 2026 is estimated at 44 per cent of GDPHaving achieved a fiscal consolidation target below 45 per cent markets will look for clarity on the debttoGDP reduction roadmap and whether the government provides a specific fiscal deficit target for FY27 Expectations are that the deficit could be pegged at around 4 per cent of GDPWhat is capital expenditure and why is it crucial for economic growthThe governmentrsquos planned capital expenditure for FY26 stands at Rs 112 lakh crore The upcoming Budget is expected to maintain a strong capex push with a 10ndash15 per cent increase likely even as private sector investment remains cautiousWith major pay revisions due only in FY28 the government may have room to raise capex beyond Rs 12 lakh croreWhy do markets closely track the governmentrsquos debttoGDP roadmapIn the 2024ndash25 Budget Sitharaman stated that from FY27 onwards fiscal policy would aim to place central government debt on a declining path as a percentage of GDPMarkets will closely watch the debt consolidation roadmap and timelines for bringing general government debttoGDP down to the 60 per cent target Currently the ratio is estimated at over 85 per cent including around 55 per cent central government debtWhat is gross market borrowing and why does the government rely on itGross market borrowing for FY26 was budgeted at Rs 1480 lakh crore The FY27 borrowing number will be closely tracked as it signals the governmentrsquos fiscal position revenue mobilisation and overall borrowing needsTax revenueThe FY26 Budget pegged gross tax revenues at Rs 4270 lakh crore an 11 per cent increase over FY25 This includesRs 2520 lakh crore from direct taxes personal income tax and corporate taxRs 1750 lakh crore from indirect taxes customs excise duty and GSTGSTGoods and Services Tax GST collections in FY26 are estimated to rise 11 per cent to Rs 1178 lakh croreFY27 GST projections will be keenly watched especially as revenue growth is expected to gain momentum following rate rationalisation measures introduced since September 2025What is the difference between nominal GDP growth and real GDP growthIndiarsquos nominal GDP growth for FY26 was initially estimated at 101 per cent while real GDP growth stood at 74 per cent as per NSO data However nominal growth was revised down to around 8 per cent due to lowerthanexpected inflationFY27 nominal GDP projectionsmdashexpected between 105 and 11 per centmdashwill offer cues on the governmentrsquos inflation outlookHow does a higherthanexpected RBI dividend affect fiscal deficit calculationsThe government has budgeted Rs 150 lakh crore in dividend income including Rs 102 lakh crore from the RBI and financial institutions and Rs 48000 crore from CPSEsWith the RBI already paying a higherthanexpected dividend of Rs 269 lakh crore in FY26 Budget estimates are likely to be revised upward Dividend assumptions will be closely scrutinised given recent tax relief measuresWhat is the total subsidy allocationTotal subsidy allocation for FY26 stands at Rs 383 lakh crore with food subsidy capped at Rs 203 lakh croreWhat are the key schemes and sectorsThe spotlight will also be on allocations for flagship schemes such as VBG RAM G along with spending on health education and other priority sectors