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FY27 Budget May Hit Rs 54.1 Lakh Crore, Growth of 7.9%: Report

A financial report projects the Union Budget for FY2026-27 at Rs 54.1 lakh crore, marking a 7.9% year-on-year growth. This expenditure is estimated to moderate to about 13.8% of GDP, reflecting a path of calibrated fiscal consolidation. The report also sets a fiscal deficit target of 4.16% of GDP for FY27, indicating continued progress in reducing the deficit relative to economic size. Despite strong real GDP growth, subdued nominal GDP growth is impacting revenue collections and tax devolution to states.

Key Points: FY27 Budget Projected at Rs 54.1 Lakh Crore, 7.9% Growth

  • Rs 54.1 lakh crore total expenditure
  • 7.9% year-on-year growth
  • Fiscal deficit target of 4.16% of GDP
  • Moderation in expenditure to 13.8% of GDP
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Govt likely to present Rs 54.1 lakh crore budget for FY27, growth of 7.9% YoY: Report

Report projects Rs 54.1 lakh crore Union Budget for FY27, with 7.9% YoY growth and a fiscal deficit target of 4.16% of GDP.

"consistent with a calibrated fiscal consolidation path rather than fiscal tightening - Sunidhi Securities Report"

New Delhi, February 1

Union Finance Minister Nirmala Sitharaman is expected to present a Rs 54.1 lakh crore Union Budget for FY2026-27, registering a year-on-year growth of 7.9 per cent, according to a report by Sunidhi Securities & Finance Limited.

The report highlighted that the size of the Union Budget, measured by Total Expenditure (TE) as a percentage of GDP, is the clearest indicator of the government's fiscal intent.

After averaging 14.8 per cent of GDP during FY23-FY25, Total Expenditure was budgeted at 14.2 per cent of GDP, or Rs 50.65 lakh crore, in the Budget Estimates (BE) for FY26.

However, factoring in weaker nominal GDP growth and lower revenue buoyancy, the report estimated Revised Estimates (RE) for FY26 Total Expenditure at around 14.0 per cent of GDP, or Rs 50.15 lakh crore.

It stated "For FY27, we estimate TE at Rs 54.1 tln, implying 7.9 per cent YoY growth, consistent with a calibrated fiscal consolidation path rather than fiscal tightening".

It further projected a moderation in expenditure to about 13.8 per cent of GDP in FY27, reflecting a gradual consolidation in fiscal policy.

According to the report, this trajectory is consistent with a calibrated fiscal consolidation path rather than fiscal tightening, underscoring the government's commitment to maintaining macroeconomic stability without significantly affecting growth support.

On the fiscal deficit front, the report projected the FY27 fiscal deficit target at 4.16 per cent of GDP, amounting to Rs 16.37 lakh crore, compared to 4.4 per cent of GDP, or Rs 15.69 lakh crore, in BE FY26.

While the deficit is expected to rise in absolute terms, its decline as a share of GDP indicates continued progress towards fiscal consolidation.

The report noted that India enters the Union Budget 2026-27 phase with strong real economic momentum. FY26 real GDP growth is estimated at 7.4 per cent by the Central Statistical Office, reaffirming the resilience of the underlying economy.

It also pointed out that GST reforms implemented in September last year have emerged as a structural inflection point, leading to a sharp recovery in urban demand and an improvement in growth momentum during the second half of FY26.

However, this strength in real economic activity stands in contrast to the slowest nominal GDP growth in nearly six years, estimated at around 8 per cent, reflecting strong disinflationary forces.

The subdued nominal growth impacted tax buoyancy and overall revenue collections, resulting in lower devolution of Union taxes and duties to states, the report added.

- ANI

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Reader Comments

P
Priya S
Fiscal consolidation is good, but I'm concerned about the lower devolution to states mentioned. States need funds for health and education. The central government must ensure cooperative federalism isn't compromised in the pursuit of macroeconomic numbers.
A
Aman W
The report says GST reforms helped urban demand. That's true, I've seen business pick up. But what about boosting rural consumption? Farmers and small towns need more direct income support. Budget should focus on balancing urban and rural growth.
S
Sarah B
As someone following the Indian economy, the projected decline in fiscal deficit as a % of GDP while expenditure grows is impressive. It shows disciplined spending. The key will be the quality of that spending—is it going into productive capital expenditure?
V
Vikram M
All these big numbers are fine, but what matters to the common man is price control. The report mentions "strong disinflationary forces". I hope the budget has concrete measures to keep prices of essential commodities in check. Petrol, diesel, veggies... that's our real budget!
K
Karthik V
Good to see the focus on calibrated consolidation, not sudden tightening. That protects growth. Hope the budget continues to incentivize manufacturing under PLI and boosts tech/R&D funding. That's the way to become a $5 trillion economy. Jai Hind!

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