Budget Focuses on Containing Fiscal Deficit at 4.3 Pc in FY27

Chennai: The budget chose to stick to the fiscal consolidation path and pegged the fiscal deficit for FY27 at 4.3 per cent, compared to 4.4 per cent of the current fiscal. Even as public expenditure rises by only Rs 1 lakh crore, gross market debts are estimated to rise to Rs 17.2 lakh crore in FY27 against Rs 14.82 lakh crore in FY26.

“In line with the new fiscal prudence path on debt consolidation, the fiscal deficit in BE 2026-27 is estimated at 4.3 per cent of GDP. I am pleased to inform this August House that I have fulfilled the commitment I made in FY 2021-22 to reduce the fiscal deficit to below 4.5 per cent of GDP by 2025-26. In the 2025-26 Revised Estimate, fiscal on In his speech, the Finance Minister said that it is estimated at 4.4 per cent of GDP in the Budget Estimate 2025-26.

The government aims to achieve a debt-to-GDP ratio of ’50 plus or minus one per cent’ by 2030-31. In line with this, the debt-to-GDP ratio, which was 56.1 per cent of GDP in RE 2025-26, is estimated to be 55.6 per cent of GDP in BE 2026-27. He said reducing the debt-to-GDP ratio would gradually free up resources for priority sector spending by reducing interest payments expenses.

In BE 2026-27, interest payments are estimated at Rs 14.04 lakh crore as against Rs 12.76 lakh crore in BE 2025-26. Moreover, large subsidies of 1 per cent of GDP will be roughly 10 per cent of Revenue Expenditure in BE 2026-27.

Public investments will increase from Rs 11.2 lakh crore in BE 2025-26 to Rs 12.2 lakh crore in FY27.

In 2026-27, non-debt revenues are estimated to rise to 36.5 lakh crore rupees as against 34 lakh crore rupees in the FY26 revised estimate. The total expenditure is estimated to be Rs 53.5 lakh crore in FY27 against RE forecast of Rs 49.6 lakh crore. The Centre’s net tax revenues are estimated at Rs 28.7 lakh crore as against Rs 26.7 lakh crore in RE FY26.

To finance the fiscal deficit, the government’s gross and net Market liabilities through term securities in BE 2026-27 were budgeted at Rs 17.20 lakh crore and Rs 11.73 lakh crore respectively, while in BE 2025-26 it was Rs 14.82 lakh crore and Rs 11.54 lakh crore. Net market liabilities from forward securities are estimated at Rs 11.7 lakh crore and the balance financing is expected to come from small savings and other sources.