Budget 2026 ready reckoner: Fiscal policy change amid global headwinds

To hold the fiscal deficit at 4.4% of GDP, the Centre trims spending and shifts to a debt-anchored framework for greater policy flexibility amid global risks

The Centre has projected a 2 per cent cut in expenditure in the Revised Estimates for the current financial year compared to that in the Budget Estimates, partly to offset the impact of lower personal income tax collections and keep the fiscal deficit at 4.4 per cent of gross domestic product (GDP).  The reduction is expected to be slightly steeper in capital expenditure than in revenue expenditure. From the next financial year, the Centre will shift its fiscal framework by making debt the main anchor. This would give the Centre room to deploy countercyclical fiscal measures, if needed, amid global uncertainties.