Growth Focus: FM Sitharaman on Budget 2026-27

Finance Minister Nirmala Sitharaman underscored that growth is the government's primary focus following the presentation of the Union Budget 2026-27. The Minister aims to reduce the fiscal deficit to 4.3% of GDP, emphasizing infrastructure spending as crucial for sustaining growth. While the target for FY27 is slightly more comfortable than initially planned, Sitharaman clarified that the government has not curtailed spending to achieve fiscal consolidation.

The Finance Minister highlighted that disinvestment and asset monetisation would play a significant role in generating revenue. She noted that while the fiscal deficit is a concern, the government is also committed to maintaining a manageable debt-to-GDP ratio. For FY27, the target is set at 55.6%, a shift towards a debt-based fiscal framework.

In addressing the challenges of slow tax revenue growth, especially with the upcoming Eighth Pay Commission's implementation in FY28, Sitharaman reiterated the importance of disinvestment and widening the tax base. The estimates for FY27, according to her, are realistic and achievable.

On the recent increase in the securities transaction tax (STT) on futures and options (F&O) trading, she explained that this move is intended to deter speculative trading, which has reportedly led many retail investors to incur significant losses. The increased STT is expected to act as a deterrent, and no further changes to STT are anticipated beyond this adjustment.

Sitharaman also addressed modifications to Customs duties aimed at supporting labor-intensive sectors such as textiles and leather. She clarified that these changes were not influenced by US tariffs but are part of a broader strategy to benefit Indian citizens and businesses.

Commenting on external economic factors, she acknowledged the concerns regarding the rupee’s exchange rate and assured that the government is in regular communication with the Reserve Bank of India on this issue.

Lastly, the Minister discussed plans to create "champion SMEs," focusing on medium-sized enterprises while ensuring that small enterprises are not overlooked. The objective is to encourage small businesses to grow without losing their competitive advantages.