Overview
- ICRA projects the Centre to hold the fiscal deficit near 4.3% of GDP in 2026–27, slightly below the 4.4% budgeted for 2025–26.
- Capital expenditure is forecast to rise about 14% to roughly Rs 13.1 trillion, or around 3.3% of GDP, to support investment.
- In absolute terms the fiscal deficit is seen increasing to about Rs 16.9 trillion, with gross market borrowings also near Rs 16.9 trillion, up 15–16% on higher capex and redemptions.
- The Centre’s debt-to-GDP ratio is estimated to ease from 56.1% in 2025–26 to roughly 55.1% in 2026–27 on the assumed consolidation path.
- ICRA expects gross tax revenue growth of about 7% led by an 11% rise in direct taxes and muted ~2% indirect taxes after GST cuts, putting net tax revenue near Rs 28.5 trillion after an estimated Rs 15.4 trillion devolution to states; the Union Budget will be presented on February 1.