Union Budget 2026: Beyond Borrowings - Fiscal Discipline Meets Market Jitters

• The FY27 Union Budget receives mixed reactions, lauded for fiscal discipline but facing bond market jitters and potential revenue shortfalls.
• Government shifts fiscal anchor from deficit-based to debt-to-GDP targeting, aiming to reduce central government debt to 50% (±1%) of GDP by FY31.
• Elevated gross borrowing of Rs 17.2 lakh crore for FY27, coupled with modest 7% tax revenue growth, keeps 10-year G-sec yields high.
• Disinvestment remains a challenge; Economic Survey proposes amending Companies Act to lower sovereign holding threshold to 26% to unlock value.
• Capex plan shows robust 11.5% growth for FY27, with a significant push for defence capex (~17.5% growth) and increased interest-free loans to states.

Why It Matters: The FY27 Budget balances fiscal prudence with market pressures, shifting focus to debt-to-GDP while navigating borrowing and disinvestment hurdles.