India’s government plans to improve its fiscal position slightly in the next fiscal year, reducing the budget deficit and debt while boosting manufacturing in sectors ranging from textiles to chips.
Finance Minister Nirmala Sitharaman on Sunday, in her ninth consecutive budget speech, said the government expects the fiscal deficit to be 4.3 per cent of gross domestic product (GDP) in 2026-27, down from 4.4 per cent in 2025-26.
Sitharaman said the government expects India’s debt-to-GDP ratio to decline from 56.1% in 2025-26 to 55.6% in the next financial year.
The Finance Minister pointed to the wide-ranging uncertainties facing India.
“Today, we face an external environment where trade and multilateralism are at risk and access to resources and supply chains is disrupted,” Sitharaman said. “New technologies are transforming production systems, while demand for water, energy and critical minerals is rapidly increasing.”
The government plans to encourage manufacturing in seven key sectors, including semiconductors, rare earth magnets, pharmaceuticals, chemicals, capital goods, textiles and sporting goods.
indian benchmark nifty 50 Immediately after Sitharaman’s speech in Parliament, the stock index fell by about 1.7% to close 1.96% lower.
India’s economic growth rate for fiscal 2027 is expected to range from 6.8% to 7.2%, outpacing other major economies, the country said in its 2026 Economic Survey released on Thursday.
“As a growing economy with expanding trade and capital needs, India needs to maintain deep integration with global markets, export more and attract stable long-term investment,” Sitharaman said.
Consulting firm PwC India said the budget puts the country “at a crossroads that will propel the country into the next phase of transformation.”
“The Union Budget 2026-27 is an opportunity to define India’s role towards financial stability while helping businesses prepare for the future, especially as we navigate the opportunities for AI adoption alongside challenges around talent, infrastructure, governance and trust,” PwC India said in an online commentary.
