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Economy

Budget 2026: From auto, telecom, railways to defence - Morgan Stanley points out key reforms needed in various sectors

Finance minister Nirmala Sitharaman will present the Union Budget for 2026–27 on 1 February, with expectations running high across sectors at a time when the global economy is grappling with tariff pressures and heightened geopolitical uncertainty that continue to disrupt cross-border trade. Despite the volatile global macroeconomic environment, the Indian economy remains resilient. Analysts expect Budget 2026 to steer clear of populist measures as the government pursues fiscal consolidation, instead prioritizing capital expenditure and investment in social infrastructure.

Budget 2026: From auto, telecom, railways to defence - Morgan Stanley points out key reforms needed in various sectors

Credit: Livemint

Key Highlights

  • Morgan Stanley expects the government to peg fiscal deficit at 4.2% of GDP in FY27, compared with a target of 4.4% in FY26 announced by Sitharaman in the Union budget, and marking the shallowest pace of consolidation since FY23.
  • India’s fiscal deficit for the April-October 2025 period stood at ₹8.25 trillion, or 52.6% of the 2025-26 budget target, according to the latest data released by the Controller General of Accounts, up from ₹7.51 trillion, or 46.5% of the estimate, in the same period last year.
  • The government ended FY25 with a fiscal deficit of 4.8%, lower than the revised estimate of 4.9%.
  • “The pace of fiscal consolidation will be consistent with central government debt reduction to 55.1% of GDP from 56.1% in FY26.
  • A pickup in nominal growth will help to lift tax buoyancy and improve tax collections in FY27, helping the government to prioritize capex and social infrastructure-related spending alongside gradual consolidation,” a team of economists and strategists at Morgan Stanley said in a report.
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Sources

  1. Budget 2026: From auto, telecom, railways to defence - Morgan Stanley points out key reforms needed in various sectors

This quick summary is automatically generated using AI based on reports from multiple news sources. The content has not been reviewed or verified by humans. For complete details, accuracy, and context, please refer to the original published articles.

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