Union Budget FY 2026-27: Government Pegs Total Expenditure at Rs 53.47 Lakh Crore
Finance Minister Nirmala Sitharaman, while replying to the Budget discussion in the Lok Sabha, has announced that the Union Budget for the fiscal year 2026-27 projects total expenditure at Rs 53.47 lakh crore. This outlines the government's strategic approach of maintaining high capital spending alongside a path of fiscal consolidation.
Revised Estimates and Budget Comparisons
The revised estimate for the current financial year ending March 31 has been placed at Rs 49.64 lakh crore. This figure is lower than the Rs 50.65 lakh crore projected in February 2025. For context, the Budget size for FY 2024-25 stood at Rs 46.52 lakh crore.
Tax receipts for FY27 are projected at Rs 44.04 lakh crore, marking an increase of approximately 8% over the previous year. Despite this rise, overall expenditure remains significantly higher to support the government's growth priorities.
Record Capital Expenditure and State Investment Support
Highlighting the infrastructure-led growth strategy, Sitharaman revealed that capital expenditure allocation has been raised to a record Rs 12.2 lakh crore. This accounts for 3.1% of GDP and represents an 11.5% increase over the revised estimates for FY 2025-26.
On the recommendation of state finance ministers, the Centre has increased 50-year interest-free capital expenditure loans under the Special Assistance to States for Capital Investment (SASCI) scheme to Rs 2 lakh crore. With this enhancement, effective capital expenditure is estimated to reach Rs 17.1 lakh crore, or about 4.4% of GDP.
Fiscal Deficit and Borrowing Roadmap
The government has projected the fiscal deficit at 4.3% of GDP, equivalent to Rs 16.95 lakh crore, for FY27. This reaffirms its commitment to fiscal consolidation.
To finance this deficit, net market borrowings from dated securities are estimated at Rs 11.7 lakh crore. The remaining financing will be sourced from small savings and other channels, while gross market borrowings are projected at Rs 17.2 lakh crore.
Sitharaman emphasized the government's continued focus on reducing the debt-to-GDP ratio in alignment with the Fiscal Responsibility and Budget Management (FRBM) framework. She recalled that the government had indicated in Budget 2025-26 its aim to bring the debt-to-GDP ratio to 50±1% by FY 2030-31.
In line with this roadmap, the debt-to-GDP ratio is estimated at 55.6% in Budget Estimates for FY27, compared with 56.1% in the revised estimates for FY26. A declining debt ratio is expected to gradually free resources for priority sector spending by reducing interest outgo.
Health Infrastructure and Medical Hub Initiatives
The finance minister announced that states can compete to be selected for one of five proposed regional medical hubs through PM Gati Shakti filters. States are encouraged to propose integrated hubs where medical education and patient treatment infrastructure will be developed concurrently.
Dedicated institutions for nursing and 10 allied health services will be established within these hubs to support skill creation and employment generation. Over time, these hubs could evolve into medical tourism centres, adding to their economic and social value.
Fertiliser Availability and Farm Support Measures
Addressing concerns over fertiliser availability, Sitharaman assured that there is sufficient stock to support farmers. The government has allocated Rs 1.71 lakh crore towards fertiliser imports to ensure continued supply and price stability in the agricultural sector.
Centre-State Fiscal Transfers and Tax Devolution
On fund transfers to states, Sitharaman cited findings of the 16th Finance Commission, which analysed devolution between 2018-19 and 2022-23. She stated, "So, we are not the only ones claiming this. The Finance Commission itself, after studying this in detail, has stated in its report that the money which has to go from the Centre to the states, taking the years 2018–19 to 2022–23 as examples and examining them, has clearly said that whatever amount has to go from the central government to the state governments has been given."
She added, "There is no scope for any doubt in this for the states." For FY27, the states' share in central taxes is estimated at Rs 25.44 lakh crore, an increase of Rs 2.7 lakh crore over the previous year.
Sitharaman also clarified that cess and surcharge collections are utilized for development works across various sectors and are separate from the 41% tax devolution recommended by the Finance Commission.
Trade Deal Politics and Opposition Response
The finance minister responded to criticism from Leader of Opposition Rahul Gandhi regarding India's interim trade agreement with the US. Echoing remarks made by Union Minister Kiren Rijiju, Sitharaman said, "Koi mai ka laal paida nahi hua jo humare desh ko bech de ya kharid le (no one has the audacity to sell or buy out India)."
She further alleged that the Congress-led UPA government had compromised India's position at the World Trade Organization. Additionally, she criticized governance and law-and-order conditions in West Bengal, which is scheduled to go to elections in the next two months.
