India’s finance minister sees modest fiscal consolidation in budget
The Indian government is planning a modest improvement in its financial picture in the next fiscal year by reducing the fiscal deficit and debts while increasing production in sectors ranging from textiles to chips.
Finance Minister Nirmala Sitharaman for the ninth consecutive time budget speechThe government projects its fiscal deficit to fall to 4.3% of GDP in fiscal 2026-27 from 4.4% in 2025-26, it said on Sunday.
Sitharaman said the government expects India’s debt-to-GDP ratio to fall to 55.6% in the next fiscal from 56.1% in 2025-26.
The finance minister noted the broader uncertainties facing India.
“Today we face an external environment where trade and multilateralism are compromised and access to resources and supply chains is disrupted,” Sitharaman said. he said. “New technologies are transforming production systems while sharply increasing the demand for water, energy and critical minerals.”
The government plans to promote manufacturing in seven key sectors, including semiconductors, rare earth magnets, pharmaceuticals, chemicals, capital goods, textiles and sports equipment.
India’s benchmark Nifty 50 stock index fell nearly 1.7% shortly after Sitharaman’s speech in parliament.
In its economic survey for fiscal 2026 released on Thursday, India said its economy grew between 6.8% and 7.2% in fiscal 2027, outpacing most other major economies.
“As a growing economy with expanding trade and capital needs, India also needs to remain deeply integrated with global markets, export more and attract stable long-term investments,” Sitharaman said. he said.
Consulting firm PwC India said the budget placed the country “at a turning point to propel the country into the next phase of transformation”.
“Union Budget 2026-27 holds opportunities to define India’s role towards financial stability, while also supporting future-proofing of businesses, especially as we navigate challenges in talent, infrastructure, governance and trust, as well as opportunities to adopt AI,” PwC India said in an online commentary. he said.
