On Wednesday, Finance Minister Nirmala Sitharaman announced that the government has budgeted Rs 53.47 trillion for the next fiscal year, a 7.7% increase from the current fiscal ending March 31.
According to the revised estimates, the current fiscal's budget is Rs 49.64 trillion, lower than the Rs 50.65 trillion estimated in February 2025. The budget for the 2024-25 fiscal year was Rs 46.52 trillion.
The finance minister stated that total expenditure is projected at Rs 53.47 trillion in the next fiscal, significantly higher than tax revenues.
The government aims for tax revenues of Rs 44.04 trillion, an 8% increase from the previous year.
Speaking about capital expenditure, she said the government has allocated the highest-ever amount of Rs 12.2 trillion, which is 3.1% of GDP and 11.5% higher than the Revised Estimates (RE) for 2025-26.
In response to recommendations from state finance ministers, she announced that capital expenditure loans for states have been increased to Rs 2 trillion for Special Assistance to States for Capital Investment (SASCI).
This, she said, results in effective capital expenditure of Rs 17.1 trillion, which is 4.4% of GDP.
Besides this, she said the government is adhering to fiscal discipline and has projected a fiscal deficit of 4.3% of GDP or Rs 16.95 trillion for FY27.
To finance this fiscal deficit, net market borrowings from dated securities are estimated at Rs 11.7 trillion. The remaining financing is expected to come from small savings and other sources. Gross market borrowings are estimated at Rs 17.2 trillion.
She further explained that focusing on reducing the debt-to-GDP ratio is part of the Fiscal Responsibility and Budget Management (FRBM) framework.
To achieve accepted standards of fiscal management, in Budget 2025-26, she had indicated that the central government would aim to reach a debt-to-GDP ratio of 50±1% by 2030-31.
In line with this, the debt-to-GDP ratio is estimated to be 55.6% of GDP in BE 2026-27, compared to 56.1% of GDP in RE 2025-26.
A declining debt-to-GDP ratio will gradually free up resources for priority sector expenditure by reducing interest payments.
Speaking about other key announcements in the budget, she said, through the PM Gati Shakti initiative, states can aspire to be selected for one of the five regional medical hubs that the government plans to establish.
States can propose and seek approval for these hubs, where medical education and patient treatment can be developed together in one integrated area, she said.
Nursing and 10 different allied health services will have dedicated institutions within these hubs, through which people can learn, gain skills, and find employment, she said, adding that these hubs can also become medical tourism centers over time.
Addressing claims of fertilizer shortages in the country, she said that there is sufficient supply for farmers, and the government has allocated Rs 1.71 trillion for its import to support farmers.
Regarding the Centre's fund transfers to states, Sitharaman said that the 16th Finance Commission analyzed the state's share transferred by the Centre from 2018-19 to 2022-23, and concluded that in each of these years, the devolution made by the Centre exactly matches the recommendations of the Finance Commission.
"Therefore, we are not the only ones making this claim. The Finance Commission itself, after studying this in detail, has stated in its report that the money which has to go from the Centre to the states, taking the years 2018–19 to 2022–23 as examples and examining them, has clearly stated that whatever amount has to go from the central government to the state governments has been provided," she said.
This provides assurance to the states, she added.
In the coming FY 2026-27, she said, the states' share is estimated at Rs 25.44 trillion, which will be devolved to them - an increase of Rs 2.7 trillion from the previous year.
She also pointed out that the cess and surcharge collected by the Centre are given to the states for development work in various sectors.
This is separate from the 41% of funds allocated to the states as per the recommendation of the Finance Commission.
Sitharaman also provided a detailed rebuttal to Leader of Opposition Rahul Gandhi's claims that India has succumbed to US pressure while signing the interim trade agreement with Washington.
Echoing sentiments of Union Minister Kiren Rijiju, the Finance Minister said, "No one has the audacity to sell or buy out India."
She said that in fact, it was the Congress-led UPA government that surrendered to the World Trade Organization and sold out the interests of the poor and farmers. In her response, she also targeted the TMC government in West Bengal, saying it's law and order situation is the problem, not the state government.
She criticized the poor law and order situation in the state, saying that West Bengal Chief Minister Mamata Banerjee, instead of improving it, is asking women to stay indoors at night.
West Bengal will go to elections in the next two months.
