Committed Expenditure Creeps Up as Interest Payments Cross Rs14 Lakh Crore
Over half of government’s revenue receipts locked into interest and pensions, squeezing space for growth spending
By Samreen Wani
Last Updated: Feb 01, 2026, 20:15 IST1 min
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The Union Budget 2026-27 reveals a government increasingly squeezed by its fixed financial obligations. Committed expenditure—the portion of revenue receipts locked into mandatory spending like interest payments and pensions—is set to rise to 53 percent in 2026-27, up from 51.8 percent in FY26 revised estimates. The uptick, while modest, comes at a time when the government is simultaneously trying to maintain fiscal discipline and ramp up capital spending to sustain economic growth.
The single largest component of committed expenditure is interest payments, which are budgeted at Rs14.04 lakh crore for 2026-27, crossing the Rs14 lakh crore mark for the first time. That represents a 10.1 percent jump over the Rs12.74 lakh crore revised estimate for 2025-26. The climb in interest costs—from Rs5.83 lakh crore in 2018-19 to Rs14.04 lakh crore in just eight years.
The government accumulated significant debt during and after the pandemic, when the government significantly ramped up borrowing to shore up the economy.
Total pension obligations, encompassing both civil and defence pensions, are pegged at Rs4.68 lakh crore in 2026-27, a 2.6 percent increase over the current year. Civil pensions alone are budgeted at Rs2.96 lakh crore, while defence pensions account for Rs1.71 lakh crore.
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The combined weight of interest payments and pensions now comprise over half of the government’s revenue receipts before a single rupee is spent on development or discretionary programmes. This leaves less fiscal space for capital investments in infrastructure, health care, and education—the very areas the government has repeatedly flagged as growth drivers.
Committed expenditure briefly spiked to 62.2 percent during 2020-21, the peak of the pandemic, before the government brought it back down to the low 50s through a combination of revenue recovery and fiscal consolidation. The current uptick to 53 percent suggests that while the worst of the fiscal stress has passed, the structural burden of pensions and interest payments continues to cast a shadow over India’s budgetary priorities.
Read Forbes India's complete Budget 2026-27 coverage here
First Published: Feb 01, 2026, 20:28
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