Budget 2026–27: Fiscal math points to higher borrowings even as deficit glide path stays intact

Key Highlights

• Economists interpret this as a signal of heavier early-year spending, particularly on infrastructure and welfare-linked outlays.
• Despite the sharper pace of deficit accumulation in the current year, the government is expected to announce a fiscal deficit target of around 4.3 per cent of GDP for FY 2026–27, in line with its stated glide path towards 3 per cent by 2030–31.
• Officials and analysts argue that this calibrated approach balances the need for fiscal credibility with the demands of growth support.
• “The glide path allows the government to consolidate without choking off investment at a time when global growth remains uneven,” said a senior economist at a public-sector bank, adding that India’s macro fundamentals provide room for a gradual rather than aggressive correction.
• Budget expectations remain broadly positive, underpinned by strong GDP growth, robust industrial output as reflected in recent IIP data, sustained structural reforms and improvements in the ease of doing business.