The Indian government expects a slight improvement in its fiscal position in the next financial year, with a reduction in the budget deficit and debt, while boosting manufacturing in sectors ranging from textiles to chips.
Finance Minister Nirmala Sitharaman for the ninth consecutive time budget speechsaid on Sunday that the government expects its fiscal deficit to fall to 4.3 per cent of GDP in the 2026-27 financial year from 4.4 per cent in 2025-26.
Sitharaman said the government expects India’s debt-to-GDP ratio to fall to 55.6% in the next fiscal year from 56.1% in 2025-26.
The finance minister highlighted the broader uncertainties India faces.
“Today we face an external environment in which trade and multilateralism are at risk and access to resources and supply chains is disrupted,” Sitharaman said. “New technologies are transforming production systems while dramatically increasing demand for water, energy and essential minerals.”
The government plans to encourage manufacturing in seven key sectors, including semiconductors, rare earth magnets, pharmaceuticals, chemicals, capital goods, textiles and sporting goods.
The reference of India Clever 50 The stock index was down around 1.7% soon after Sitharaman’s speech in parliament and closed down 1.96%.
In his economic survey for fiscal 2026 released on Thursday, India said it expects its economy to grow between 6.8% and 7.2% in fiscal 2027, outpacing most other major economies.
“As a growing economy with growing trade and capital needs, India must also remain deeply integrated with global markets, exporting more and attracting stable, long-term investments,” Sitharaman said.
Consultancy firm PwC India said the budget places the country “at the crossroads to push the nation towards its next phase of transformation”.
“The Union Budget 2026-27 provides opportunities to define India’s role in financial stability, while encouraging businesses to be future-ready, particularly as they harness opportunities from AI adoption as well as challenges related to talent, infrastructure, governance and trust,” PwC India said in an online commentary.
