Budget 2026: According to ICRA, the government’s gross dated market borrowing is likely to rise by 15–16%, reflecting increased funding requirements. In Budget 2025–26, gross borrowing was projected at ₹14.82 lakh crore, but later policy announcements led to a ₹10,000 crore reduction in the total borrowing estimate for the ongoing financial year FY26.
Budget 2026 Borrowing Outlook
It is likely that the central government may raise ₹16–17 lakh crore through debt securities in FY27, according to economists. Market experts believe that the debt-to-GDP ratio could decline to around 55% in FY27, compared with an estimated 56% in FY26, indicating gradual fiscal consolidation. The Union Budget for FY2026–27 is scheduled to be presented on February 1, 2026.
In Budget 2025–26, the government had projected gross market borrowing of ₹14.82 lakh crore. However, subsequent announcements led to a ₹10,000 crore reduction in the total borrowing estimate for the ongoing financial year FY26. During the first half of FY26 (April–September 2025), the government planned to borrow ₹8 lakh crore, but actual borrowing stood at ₹7.95 lakh crore, resulting in a shortfall of ₹5,000 crore in the first half.
Later, in September 2025, the central government announced a borrowing plan of ₹6.77 lakh crore for the second half of FY26 (October 2025–March 2026). This also reflected a ₹5,000 crore cut compared to earlier estimates. As a result of these revisions, the government’s total market borrowing for FY26 is now estimated at ₹14.72 lakh crore, which is ₹10,000 crore lower than the original Budget estimate. In September, the Ministry of Finance stated that out of the ₹6.77 lakh crore borrowing planned for the second half of the financial year, ₹10,000 crore will be raised through government green bonds. The government plans to complete its second-half borrowing programme through 22 weekly auctions, scheduled to run until March 6, 2026.
Budget 2026 FY27 Economic Outlook
Budget 2026 According to a PTI report, ICRA expects that despite a marginal decline in the fiscal deficit-to-GDP ratio, the government’s gross dated market borrowing could rise sharply by 15–16%, potentially reaching ₹16.9 lakh crore. The primary driver of this increase would be higher redemptions of government bonds. However, the impact of the higher borrowing could be partially offset through government bond switching operations.
Meanwhile, a Financial Express report quoted Sameer Narang, Chief Economist at ICICI Bank, as saying that gross borrowing in FY27 is likely to be around ₹16 lakh crore, while net borrowing may stand at approximately ₹11.6 lakh crore. Gross borrowing could increase further depending on the repayment schedule. In contrast, Nomura economists estimate that the government’s gross borrowing for the new financial year could be as high as ₹17.5 lakh crore.
Budget 2026 Fiscal Anchor Set to Change
According to Aditi Nayar, Chief Economist, Head of Research and Outreach at ICRA, the Union Budget for FY2026 outlined a shift in the government’s fiscal framework starting FY27. The government plans to target the fiscal deficit annually from FY27 to FY31 in a manner that gradually reduces the Centre’s debt, aiming to bring the debt-to-GDP ratio to around 50% ±1% by March 31, 2031.
This marks a change in the fiscal anchor, moving away from an annual fiscal deficit target to a debt-to-GDP ratio–based framework. In other words, instead of focusing solely on year-wise fiscal deficit numbers, the government will increasingly monitor and manage the overall debt level relative to GDP.
Budget 2026 Notably, the GDP base year is being revised to 2022–23. In addition, the recommendations of the 16th Finance Commission, which will come into effect from FY27, could lead to changes in tax revenue sharing between the Centre and states, as well as grants provided by the central government to states.
