Budget 2026: India's macroeconomic fundamentals strong, global uncertainties factored into Budget process, says FM Sitharaman

Union Budget 2026 | Underlining that the fundamentals of the Indian economy remain strong, Finance Minister Nirmala Sitharaman on Sunday noted that global uncertainties have impacted many sectors and was one of the factors taken into consideration while preparing the Union Budget 2026-27.

“Global uncertainty is something which definitely occupies all the officers’ minds as we were preparing for the Budget. But I wouldn’t attribute it as the cause for any one step. Across the board, we kept that in mind,” she told reporters at a press conference after presenting the Union Budget in the Lok Sabha on Sunday.

The minister noted that India’s macroeconomic fundamentals are strong. “You heard the Chief Economic Advisor speak that despite having a macro sound economic foundation, you are still facing a world which is uncertain. Therefore, when currency -- Indian rupee versus the dollar becomes an issue, you have done everything within the country to make sure your fundamentals are fine, but uncertainty globally is affecting on many grounds and we are seized of it,” she said.

Responding to another question, the minister said that global uncertainty is facing many domestic sectors, and the Budget has proposed several schemes for those in MSMEs, textiles, leather, shoe uppers, rural economy and farmers as well as women entrepreneurs.

“These are ways in which we are reaching out with the common small people to make sure that they don't have to face your big changes in the life because of any volatility out from coming from outside. They could be contributing to exporting small things but different, uncertainties can affect them equally,” the finance minister noted.

Fiscal consolidation

The FM also noted that the fiscal deficit target for FY27 has been kept only marginally lower than FY26 to ensure that it is achieved and does not bring any “turbulence” to the economy. For FY27, the Centre has targeted a fiscal deficit of 4.3% of the GDP, only slightly lower than 4.4% estimated in FY26.

With a new fiscal road map, the Budget has also proposed that the Central Government debt to GDP ratio will be lowered to 55.6% of GDP in BE 2026-27

The FM noted that drastic fiscal measures often don’t go down well. “We will have to be gradual but yet keep it well within the band which gives confidence and to show that we care for prudent management,” she said, adding that there was no point in keeping the deficit target at 4% of the GDP.

“It has to be steady so that economy grows in a steady speed. So it is a responsible number, and realistic number. It's not as if I wanted it to be gradual. It is a responsible number. We should achieve it and equally, not bring in any kind of turbulence in India,” she said.

Commenting on the new fiscal anchor, economic affairs secretary Anuradha Thakur underlined that the Centre will continue to keep the fiscal deficit in mind. “It's not that we are going away from the fiscal deficit. Fiscal deficit will be the operational target to attain the debt-to-GDP. Both work in tandem,” she said.

However, several analysts have remained concerned about the fiscal consolidation plan.

Christian de Guzman, Senior Vice President, Moody's Ratings noted that the Budget provides tactical support for the economy against the backdrop of prevailing external uncertainties, including the unresolved issues around US tariffs, and despite the proven resilience of economic growth over the past year.

“At the same time, support for the economy, which includes measures announced in recent months such as GST rationalisation, will lead to an ongoing erosion of tax revenue as a share of GDP that will worsen debt affordability as measured by interest payments relative to revenue,” he said.

The agency also does not expect significant progress on debt reduction, which supplants deficit consolidation as the anchor for fiscal policy, leaving its broader assessment of India’s fiscal strength intact, he further said.