Budget 2026: How the size of India's budget has grown in 10 years

Union Budget 2026 | Finance Minister Nirmala Sitharaman presented the Union Budget for FY27 in Parliament on February 1. The total expenditure for the year has been pegged at Rs 53.47 lakh crore. Over the past decade, India’s Union Budget has expanded sharply, reflecting a larger economy, rising public spending needs, and a stronger push towards infrastructure. Data from CMIE’s Economic Outlook shows that while total government spending and capital expenditure have grown significantly, interest payments have also risen steadily, underlining the increasing cost of government borrowing.

In FY18, India’s total budget stood at Rs 21.42 lakh crore. By FY27, it is estimated at Rs 53.47 lakh crore, a rise of about 150% in ten years. This expansion reflects higher welfare spending, infrastructure investment, and increased allocations to defence, health, and social schemes.

The year-on-year growth in the total budget has averaged around 8%, indicating steady but controlled expansion. Even during years of economic stress, such as the pandemic period, government spending continued to rise to support growth and protect vulnerable sections.

Capital Expenditure Sees the Sharpest Rise

The most striking change in the budget has been the sharp increase in Central government’s capital expenditure. Capex has risen from Rs 2.63 lakh crore in FY18 to an estimated Rs 12.22 lakh crore in FY27. This is a growth of over 360% in ten years.

Capital expenditure includes spending on roads, railways, ports, defence infrastructure, and other long-term assets. Since FY21, the government has clearly prioritised capex as a growth engine, betting that higher public investment will crowd in private investment and create jobs.

The average annual growth in capital spending has been around 12%, much faster than overall budget growth. This shift signals a move away from pure consumption spending towards asset creation.

Interest Payments Continue to Climb

While higher spending supports growth, it comes at a cost. Interest payments, the money the government pays on its past borrowings have risen from Rs 5.29 lakh crore in FY18 to an estimated Rs 14.04 lakh crore in FY27. That is an increase of about 165% over ten years.

Interest payments now consume a large portion of government revenues. With an average annual growth of 10%, this item grows faster than total budget expenditure, limiting fiscal flexibility. A higher interest burden leaves less room for fresh spending on development and welfare.

The sharp rise after FY22 reflects higher borrowing during the pandemic years and the impact of higher interest rates.

Pandemic Years Mark a Turning Point

FY21 stands out as a key year in the data. Total budget spending jumped sharply to Rs 35.10 lakh crore from Rs 26.86 lakh crore in FY20. This increase was driven by emergency spending to manage the economic shock caused by Covid-19.

Since then, spending levels have remained high, even as the focus has shifted from relief to investment-led growth.

Note: FY26 data are Revised Estimates (RE), while FY27 figures are Budget Estimates (BE).