Sitharaman's Budget 2026-27: Fiscal Discipline Meets Growth Aspirations

• Finance Minister Nirmala Sitharaman presented the 2026-27 budget, emphasizing fiscal discipline and growth under a new macro-fiscal policy framework.
• The budget targets lowering the central government's debt-to-GDP ratio to 50% by 2031, with a 4.3% fiscal deficit target for 2026-27.
• Capital expenditure is projected to rise to Rs 12.2 lakh crore in 2026-27, an 11.5% increase, signaling continued government investment in infrastructure.
• The budget relies on robust nominal GDP growth (projected 10% for 2026-27) and increased revenue collections, including a significant RBI dividend payout.
• Challenges include factoring in the 8th Pay Commission payouts from 2027 and potential moderation in the broader economy affecting tax assumptions.

Why It Matters: Sitharaman's 2026-27 budget prioritizes fiscal prudence, debt reduction, and infrastructure investment for sustained growth.