India's 2026-27 Budget to Focus on Debt Consolidation and Capital Expenditure

As India prepares for the 2026-27 Union Budget, economists anticipate a fiscal deficit target around 4.2-4.4% of GDP, with a strategic shift towards anchoring fiscal consolidation on the debt-to-GDP ratio rather than the deficit. The government is expected to borrow Rs 16-17 lakh crore, driven by a large redemption profile, while prioritizing capital expenditure to support growth. Projections indicate a modest decline in the debt-to-GDP ratio amid cautious revenue and expenditure assumptions, with fiscal discipline emphasized amid evolving macroeconomic conditions.