The countdown for Budget 2026 has picked pace. All eyes are on what the FM will announce on February 1. As per popular expectations, the Central government’s fiscal deficit is expected to meet the budgeted target despite a shortfall in receipts, even as weak net tax collections in FY26 are likely to weigh on overall revenue collections.
However, the government is expected to increase the capital expenditure on the back of a strong RBI dividend payout and tighter control on revenue spending. According to Radhika Piplani, Chief Economist of Motilal Oswal, the budget will continue the path of gradual fiscal consolidation.
Motilal Oswal’s top Budget expectation-
Here are Motilal Oswal’s 5 key expectations from the Budget –
1. Capex expected to rise 10.4%
Piplani expects the government to step up capital expenditure (capex) on areas such as roads, railways and infrastructure by 10.4%.
In the previous Union Budget 2025, the government had announced a capex allocation of Rs 11.21 trillion.
2. Massive RBI dividend expectations: Rs 3 trillion
Non-tax revenues are expected to provide a key cushion in FY26, driven by higher dividends, which are expected to help offset the impact of weak tax buoyancy on overall revenues.
Radhika Piplani expects the RBI’s massive dividend payout of Rs 3 trillion to play a major role in supporting revenue receipts.
In FY26 also, the government managed its finances in FY26 largely due to strong non-tax revenues, led by a record RBI dividend of Rs 2.7 trillion
3. Decline in revenue spending
On the revenue front, spending is expected to decline. This is reflecting the government’s continued push towards fiscal consolidation. In the previous Budget the revenue expenditure was estimated at Rs 38.2 trillion for FY26.
4. Joint taxation of couples may gain ground
While all eyes will be on the announcement for income tax relief, Piplani said there might be an increase in joint taxation of couples. “On consumption, I see an increasing likelihood of the joint taxation of couples,” she said.
5. Fiscal deficit seen easing to 4.3% of GDP
Piplani expects fiscal deficit to fall from 4.4% in FY26 to 4.3% of GDP in FY27. “Fiscal deficit to see marginal consolidation to 4.3% of GDP,” she noted.
Overall the joint taxation of couples is something that the street is keenly awaiting for along with the capex announcements.