Budget 2026: How Better Growth & Softer Inflation Are Shaping India’s Fiscal Roadmap

As anticipation builds for the Union Budget 2026-27, Crisil’s Chief Economist Dharmakirti Joshi has highlighted that India is entering the exercise with a stronger-than-expected economic backdrop. Growth has outpaced earlier forecasts, while inflation has moderated, creating a favorable environment for fiscal planning.

Joshi noted that the government’s upgraded GDP forecast for FY 2025-26 stands at 7.3–7.4%, compared to the earlier estimate of 6.3%. Real growth is expected to moderate to around 6.7% in FY 2026-27, but a higher nominal GDP will boost tax collections and corporate revenues.

Despite this positive outlook, Joshi cautioned that global volatility, capital flow risks, and elevated state-level deficits remain challenges. He emphasized the need for fiscal prudence, private investment support, and long-term reforms to sustain momentum.

Key Highlights

• Growth Outlook: GDP growth revised upward to 7.3–7.4% for FY 2025-26.
• Inflation: Lower-than-expected inflation provides fiscal breathing space.
• Nominal GDP: Higher nominal GDP expected to improve tax revenues and corporate performance.
• Global Risks: Volatile capital flows and global uncertainty remain key concerns.
• Policy Focus: Budget likely to prioritize fiscal stability, private capex, and structural reforms.

Sources: ANI, Economic Times, Mint, Business Today