India's budget increases infrastructure spending while pledging fiscal discipline

The Modi government presented the 2026-27 budget, prioritizing higher capital spending on infrastructure and domestic manufacturing while aiming to lower the fiscal deficit to 4.3% of GDP. The finance ministry's economic survey projects growth of 6.8%–7.2% next year.

Prime Minister Narendra Modi's government presented its annual budget to Parliament for the 2026-27 fiscal year, which begins April 1. Finance Minister Nirmala Sitharaman said the plan emphasizes boosting investments in infrastructure and domestic manufacturing while maintaining fiscal prudence. The budget comes as major economies face high interest rates, geopolitical tensions and trade uncertainty. The finance ministry's economic survey, released before the budget, forecast growth between 6.8% and 7.2% next year. Key points: - The budget was presented to Parliament for the 2026-27 fiscal year starting April 1. - Government capital expenditure is planned at 12.2 trillion rupees, up from 11.2 trillion rupees last year. - The government is targeting a fiscal deficit of 4.3% of GDP, down from an expected 4.4% for the current fiscal year. - The economic survey forecasts India’s economy to grow between 6.8% and 7.2% next year. - The government plans to scale up manufacturing in seven strategic sectors, including biopharma, semiconductors, electronics components and rare earth magnets, and to establish three chemical production parks to reduce import dependence. - Finance Minister Sitharaman said there would be no populist giveaways and emphasized structural reforms and supply-chain resilience. Summary: The budget raises planned state capital spending, mainly for infrastructure, while reiterating a commitment to fiscal consolidation and structural reforms intended to strengthen manufacturing and supply chains. Implementation begins with the new fiscal year on April 1, and monitoring of outcomes and fiscal targets will take place as the year progresses.