New Delhi is bracing for a pivotal moment as Finance Minister Nirmala Sitharaman prepares to unveil the Union Budget 2026-27 on February 1. Economists anticipate a strong emphasis on defense spending, capital expenditure, and infrastructure development, alongside investments in the power sector and affordable housing. This approach aims to strike a delicate balance between social welfare initiatives and stringent fiscal discipline amid global uncertainties.
Policymakers face the dual challenge of accelerating economic growth while maintaining fiscal prudence. The budget will seek to sustain India’s growth momentum while curbing the fiscal deficit, a tightrope walk in these volatile times. Experts highlight that immediate challenges stemming from shifting global and geopolitical landscapes will also shape the allocations.
The government’s steadfast commitment to fiscal consolidation has paid dividends. From a staggering 9.2% fiscal deficit during the COVID crisis, projections now peg it at 4.4% for FY 2025-26. Analysts expect this trajectory to continue without major deviations.
This will mark Sitharaman’s ninth consecutive budget presentation, making her the first woman Finance Minister to achieve this milestone. Coming after the NDA’s third term victory in 2024, it is the second full budget of the current tenure. While last year’s budget prioritized tax reliefs to boost middle-class consumption, this one may adopt a more targeted strategy.
Reports from Motilal Oswal Financial Services underscore heightened capital spending in strategically vital sectors amid global tensions. DBS Bank notes investor focus on debt, deficit, and borrowing figures, crucial for bond markets. The Economic Survey 2025-26 forecasts GDP growth of 6.8-7.2% for FY26-27, slightly below this year’s 7.4% but surpassing market expectations.
Notably, stock markets will remain open on February 1, a Sunday, for normal trading sessions to react to the budget announcements in real-time. As India navigates complex global dynamics, this budget could set the tone for sustained resilience and strategic advancement.