BUDGET TO KEEP FISC STEADY AMID GLOBAL STORM

The Union Budget for FY27 is being formulated against the backdrop of some positive surprises, despite a highly volatile and uncertain global environment.

- DHAMAKIRTI JOSHI

India’s growth-inflation mix has proved way more favourable than anticipated, as has global growth. Overall, FY26 has been a year of resilience for India. The economy’s flexibility has been underpinned by accommodative monetary and fiscal policies, robust corporate balance sheets, and favourable factors such as an above-average monsoon and low crude oil prices.

Trade has been cushioned by the front-loading of exports, exemptions for electronics and pharmaceuticals, and a high proportion of service exports, which are less exposed to tariffs.

We expect real gross domestic product (GDP) growth to moderate (6.7% versus 7.4%) next fiscal, but the nominal one to accelerate (10.5% versus 8% in FY26) as inflation normalizes. That should support tax collections and corporate revenues.