Budget 2026: Govt has maintained fiscal prudence along with capex push, says FM Sitharaman

Govt has maintained fiscal prudence along with capex push: FM

• Budget 2026–27 boosts capital expenditure to Rs 12.2 lakh crore from Rs 11.2 lakh crore.
• Fiscal deficit set at 4.4 percent of GDP for 2025–26, 4.3 percent for 2026–27
• Government prioritizes fiscal prudence and infrastructure-led growth

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The government has maintained fiscal prudence and monetary stability while significantly stepping up public capital expenditure to support growth, Finance Minister Nirmala Sitharaman said on February 1, outlining the priorities of the Union Budget 2026–27.

“We have maintained fiscal prudence and monetary stability whilst maintaining a strong thrust on public investments,” Sitharaman said in her Budget speech.

She said India’s economic trajectory over the past decade has been characterised by stability, fiscal discipline, sustained growth and moderate inflation, even amid global uncertainty. “India's economic trajectory has been marked by stability, fiscal discipline and moderate inflation,” Sitharaman said, emphasising the government’s emphasis on macroeconomic stability.

As part of this strategy, the Budget for financial year 2026–27 proposes to increase capital expenditure to Rs 12.2 lakh crore, up from Rs 11.2 lakh crore in the Budget Estimates for 2025–26. “Public capital expenditure has increased manifold, from Rs two lakh crore in 2014–15 to an allocation of Rs 11.2 lakh crore in BE 25–26. In this coming year, that is financial year 2026–27 Budget proposes to increase it to Rs 12.2 lakh crore, to continue the momentum,” the finance minister said.

The proposed increase signals the government’s intent to sustain infrastructure-led growth at a time when private investment recovery remains uneven and global demand conditions are uncertain. Public capital expenditure has been a central pillar of the government’s growth strategy in recent years, with spending focused on roads, railways, ports, logistics, power and urban infrastructure.

The Budget announced fiscal deficit retained at 4.4 percent of GDP for 2025-26. Fiscal deficit for FY27 has been pegged at 4.3 percent of GDP.