This Budget will see many firsts, but future Budgets need a different mould

Budget 2026-27 breaks new ground, but delayed GDP rebasing and continued fiscal secrecy risk undermining its numbers within weeks

The Union Budget for 2026-27, to be presented on February 1, is set to claim credit for achieving many firsts. The most obvious of them is the presentation of the Budget on a Sunday. No finance minister of India since Independence has presented the Union Budget on a Sunday. Finance Minister Nirmala Sitharaman will be the first. She will also be the first finance minister to present the eighth consecutive full Budget, in addition to an interim Budget, which strictly is not a Budget but a vote on account. 

Another first for Ms Sitharaman would be that, for the first time in her tenure as finance minister, she will present a Budget without a formally designated finance secretary under her command. In all her previous seven full Budgets, she had a finance secretary in place to steer the Budget-making exercise. But the finance ministry has had no finance secretary since the last incumbent, Ajay Seth, superannuated and joined the Insurance Regulatory and Development Authority of India (Irdai) as its chairman at the end of June 2025. However, it must be noted that the secretaries’ team — seven in all — at the head of the ministry during this period has remained stable and unchanged. 

Of course, a view has gained ground of late that designating one of the secretaries in the ministry as the finance secretary does not make a major difference to the way a Budget is prepared. Economic Affairs Secretary Anuradha Thakur is also in charge of the Budget Division in her department and has been coordinating with other departments on work related to Budget-making. But in practical terms, there is a difference. A designated finance secretary at the helm can coordinate the Budget-making exercise with greater effectiveness within the ministry as also in interacting with other key central ministries and even the states on various revenue and expenditure imperatives. 

Most importantly, a designated finance secretary can help prevent possible conflicts arising from different messages being conveyed to the so-called Budget Group in the finance ministry through different channels and nip any confusion in the bud. An effective finance secretary can, therefore, be an efficient conduit for vetting, screening and channelling all views and suggestions on the Budget in an orderly and productive way, particularly between the finance ministry and other important stakeholders in the government, including the Prime Minister’s Office. 

Yet another first for the 2026-27 Budget, though not desirable, will perhaps be the short-lived durability or longevity of its numbers. This is not about the credibility of these numbers but a change in the yardstick by which they are evaluated. For instance, the deficit numbers or the debt anchor in the Budget are always expressed and better understood as a percentage of gross domestic product (GDP). For analysts, in particular, most other Budget numbers, like those for capital expenditure or tax as well as non-tax revenues, are also evaluated as a percentage of GDP. Equally critical will be the Budget’s projection for the nominal size of the Indian economy for 2026-27, a critical number based on which most revenue and expenditure estimates will be made. This projection will be based on the First Advance Estimates of nominal GDP for 2025-26, which were released in the first week of January 2026. 

Now, all these numbers derived as a percentage of GDP could change in just about four weeks after the presentation of the Budget on February 1. On the last Friday of February, the Ministry of Statistics will release a new set of GDP numbers with a new base year of 2022-23. In other words, it is likely that the fiscal deficit number for 2025-26, as announced in the Revised Estimate in the Budget on February 1, could undergo a change by February 27. What that might mean for the numbers projected for deficit, debt, tax collections and expenditure is difficult to say. But a change in those estimates is very likely, unless the new series, with its new base year and after incorporating several new elements in calculating GDP, shows only marginal revisions in the 2025-26 numbers. 

Could this have been avoided? The statistics ministry could have advanced the release of the new series data before the presentation of the 2026-27 Budget. Given the frequency with which the ministry has been announcing new features of the GDP series to be released on February 27, it could have compressed its deadline a bit to avoid the need for revising the revenue and expenditure numbers as a percentage of  GDP so soon after the presentation of the Budget. 

Remember that this will also be the first time in recent years that a Budget’s key numbers will have to be revised within weeks of their presentation. In 2015, the new GDP series with a base year of 2011-12 was released on January 30, 2015. The First Advance Estimates for 2014-15, based on that new series, were released on February 9, 2015. And the Union Budget for 2015-16 was presented on February 28, 2015, based on the new series numbers. There was no need for a revision or adjustment of the GDP-based deficit or receipt numbers after the presentation of the Budget. Even the previous series of GDP data with the base year of 2004-05 was released on January 29, 2010 and the First Advance Estimates for 2009-10 were released on February 8, 2010, based on that new series. And the Budget for 2010-11 was presented on February 26, 2010, using the new series numbers to project its deficit, receipts and expenditure. 

So, a legitimate question arises: If two previous rounds of GDP series revisions could manage to present their new numbers well before the presentation of the Budget, what purpose was sought to be achieved by presenting the latest GDP series almost four weeks after the Budget in 2026? 

There is yet another first the government could have attempted for this year’s Budget. The tradition so far has been that the report of the Finance Commission is made public once it is tabled in Parliament. Governments in the last many years have chosen to table it just a few days before or on the very day the Budget is presented. Details of the recommendations, which are largely accepted by the government, will have obvious implications for the expenditure allocations and transfer to the states in the forthcoming years. But does it really make sense to maintain the confidentiality of these recommendations on devolution for so many weeks? 

The Sixteenth Finance Commission submitted its report on November 17, 2025. The winter session of Parliament in 2025 began on December 1 and ended on December 19. What difference would it have made if the government had tabled the Commission’s report during the last winter session of Parliament? Would an early release have given rise to a more informed debate and also prepared the states in advance to manage their finances with more or fewer resources from the coming financial year? 

The character of the Indian economy has changed over the last many years. If the government’s decision to increase excise duty on cigarettes from February 1 could be taken in Parliament in the first week of December 2025, with marginal ripple effects on the markets and industry, the Budget exercise could not have been seriously impacted with the release of information on how central resources would devolve to the states over the next five years as soon as the report was available and tabled in Parliament. 

Yes, the surprise value of the Budget would have gone down. But as the economy develops, the character of annual Budgets too should change with fewer surprises, less secrecy and perhaps changes in tax rates through an open discussion. The last bit, of course, requires a larger debate. Enjoy the Budget 2026 season!