Union Budget 2026: Fiscal Deficit to Narrow to 4.3% by FY27, Boosts Growth

• The government projects the fiscal deficit to reach 4.3% of GDP by FY27, continuing fiscal consolidation efforts.
• The deficit is budgeted to decline from 4.8% in FY25 to 4.4% in FY26, and further to 4.3% in FY27.
• This reduction is attributed to improved revenue buoyancy, expenditure rationalisation, and a focus on growth-enhancing capital spending.
• The fiscal deficit has already narrowed significantly from a pandemic-era high of 9.2% in FY21 to 4.8% in FY25.
• Economists view this continued reduction as crucial for macroeconomic stability, lower borrowing costs, and investor confidence.

Why It Matters: India's fiscal deficit is set to steadily decline to 4.3% by FY27, balancing growth with fiscal discipline.