
MUMBAI: The budget has pegged fiscal deficit, which is the quantum of government borrowings, for the next fiscal at 4.4% and the same for the current fiscal retained at 4.8%.
Finance minister Nirmala Sitharaman plans to lower debt as a percentage of GDP from FY27. As of FY24, debt-to-GDP ratio stood at 85%. The government has lowered capital expenditure target for FY26 to Rs 11.2 lakh crore from Rs 11.11 lakh crore for FY25. Gross borrowing target for FY26 is revised upwards to 5.7% of GDP or Rs 14.82 lakh crore and for FY25 at Rs 14.01 lakh crore. Gross tax revenue projected at Rs 38.40 lakh crore, an 11.72% rise from FY24. This includes Rs 22.07 lakh crore from direct taxes and Rs 16.33 lakh crore from indirect taxes.
From where rupee comes
The FM has presented a Rs 50.65 lakh crore budget for FY26, which will be funded via tax revenue, borrowings, and non-tax receipts. The biggest component of revenue is direct taxes (income tax and corporation tax), which forms 39%. The second-biggest source is borrowings and other liabilities that add up to 24%.
The third-biggest source is indirect taxes (GST & other taxes), which form 18%. Non-tax receipts (dividends, profits, fees) constitute 9%; Union excise duties fetch 5%, customs duties form 4% and non-debt capital receipts is the lowest component of fetching just 1%.
Where does the rupee go?
The largest expenditure is share of taxes and duties to the states at 22% or Rs 14.22 lakh crore. The second-largest outgo is towards interest payments at 20% or Rs 12.76 lakh crore, while central sector schemes (excluding defence & subsidies) chip away 16%.
About 8% or Rs 4.91 lakh crore each is spent on defence, the Finance Commission transfers & other grants to the states, and on centrally-sponsored schemes. Major subsidies (food, fertiliser, fuel) take away 6% and pensions to central government employees and politicians make up 4% and other expenditures constitute another 8% of the budget.