The upcoming Budget is expected to stay on the fiscal consolidation path, with the FY27 fiscal deficit likely budgeted around 4.2-4.3% of GDP, balancing growth needs and debt sustainability, CareEdge Ratings said on Thursday.
Measures are expected to improve tax buoyancy in FY27 amid weaker FY26 collections while avoiding major rate hikes, the rating agency said in its report.
The Central government capital expenditure is projected to grow around 10% in FY27 to around Rs 12.3 lakh crore, maintaining a healthy capex-to-revenue expenditure ratio. “We expect gross borrowing to be in the range of Rs 16-17 lakh crore in FY27; Net borrowing likely at Rs 11.5-12 lakh crore,” it said.
Strong expectation of government pushing deregulation, simplified compliances, and trust-based governance to reduce regulatory friction and improve investment sentiment, it added.
CareEdge’s prediction for the upcoming budget
CareEdge expects the Budget to retain a strong focus on employment generation and skill development, with manufacturing-led job creation emerging as a key priority to absorb India’s growing workforce.
Support for MSMEs and export-oriented sectors is likely to be a central theme, given their role in job creation and competitiveness. Measures such as enhanced credit guarantees, interest subvention, duty rationalisation and improved market access through trade agreements are widely anticipated to strengthen India’s export performance and manufacturing scale, it said.
Emphasis on research
The Budget is also expected to place greater emphasis on research, development and innovation, particularly in defence and technology. Alongside this, concerted support for agriculture and the rural economy is anticipated, focusing on productivity, resilience and income stability, it said.
Overall, the forthcoming Budget is expected to combine targeted reforms, investment-led growth and cautious fiscal management to sustain India’s medium-term economic trajectory.