The budget has been drawn up quite cogently, covering all possible aspects in the fiscal space, giving incentives where required, while following the path of prudence. Two things stand out. The first relates to the data points, which raise six interesting issues that will have implications in the medium term. The second is the foresight shown in terms of focusing on emerging sectors, which makes the Budget contemporary in the context of the emerging reality.
First, when the budgetary numbers are examined closely, several issues arise in the context of fiscal consolidation. True, there is a determination to bring the ratio of debt to GDP to 50 percent by 2030. For this, the fiscal deficit ratio has to be lowered, probably to 3 percent eventually, to reach this target. For FY27, the Budget manages things well, with the fiscal deficit ratio being at 4.3 percent, which, however, is only marginally lower than the 4.4 percent of FY26. It must be pointed out that this number would be subject to change when the new GDP series is released, which can have a different number as the denominator when the FY26 figure is revealed.
The number which stands out is the gross borrowing programme of ₹17.2 lakh crore, which is very high, though the net borrowing programme has been pegged at ₹11.7 lakh crore, which is on par with last year. The clue is in the repayments of ₹5.5 lakh crore. This number will continue to be high and will climb as debt taken in the past starts maturing. This means that the market has to be prepared for this tendency and, hence, even low fiscal deficit ratios will result in higher absolute numbers, which have to be financed through market borrowings and other sources like small savings. Therefore, this will be a new normal, and the market should ideally look at the net number to get a realistic picture.
Another number which stands out is the miscellaneous receipts of ₹80,000 crore. This will include both disinvestment and asset monetisation, though in the recent past the focus has been on the latter. But this will be the way forward for the government, and this has also been subtly mentioned in the budget, that assets of public sector units will be put to better use. This will, for sure, be a significant contributor to budgets in the future too and will be reflective of the prevalent ideology.
The third number which stands out is the non-tax revenue component of dividends from banks, FIs and the RBI. Last year, the number was ₹3.04 lakh crore, and it will be ₹3.16 lakh crore in FY27. The contribution of the RBI to this component was very high last year, at above ₹2.6 lakh crore. This indicates that even in FY27, a similar contribution from the RBI would be expected and, going forward, could also become an important component of the budget.
Fourth, on the expenditure side, the interest payments outgo is significant at ₹14.0 lakh crore, compared with ₹12.74 lakh crore last year. This increase is of nearly 10 percent. The broader issue is that progressively, as deficits are incurred, the interest component will increase. Presently, it constitutes 24 percent of the overall Budget of ₹53.5 lakh crore. This is something that future budgets will have to keep in mind, as it does put constraints on other expenditure, since this cannot be compromised. In fact, this can be linked to the overall borrowing of the government, where higher borrowing will lead to higher interest costs too.
Fifth, the budget has increased the STT on both futures and options. But the budget does not see revenue coming down, which means that overall trading will not really decline but continue to be buoyant. Hence, this can be read more as a measure to curtail retail participation than to impose a cost on the long-term investor.
Sixth, the GST collections this year will be subdued, with the compensation cess being withdrawn. This will again be something that will be part of the future budgeting process. Growth in collections will be more contingent on buoyancy in consumption. This is a result of lower GST rates, which have affected revenue in FY26 too, which came in lower by ₹52,000 crore. The ramifications will also be for states when they draw up their budgets, as the two move together.
The other highlight of the budget is the futuristic view taken when focusing on sectors. Quite appropriately, the Budget has looked at rare earths, data centres and waterways. With the global environment changing, there is a need to become more self-sufficient in certain areas, and this is where the rare earths push fits in. Data centres become important when we talk of GCCs (global capability centres), as there are inherent advantages for India which have to be leveraged. The focus on inland waterways is significant, as this potential has not quite been acted upon in the past and, by doing so, can help not just to utilise this resource but also foster the logistics sector.
Hence, this budget has far-reaching announcements, even though there is not much done on the taxation front. However, as explained here, drawing up future budgets will be interesting, given the fiscal targets that have to be achieved.
(The author is the Chief Economist, Bank of Baroda and author of: Corporate Quirks: The darker side of the sun)
Read Forbes India's complete Budget 2026-27 coverage here
First Published: Feb 02, 2026, 15:08
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