Budget 2026-27: If India Borrows More to Spend, Why Does it Deliver Less Welfare? |
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Union Budget 2026-27, which the government claims is anchored in a formidable macroeconomic stance, estimates total government expenditure at Rs 53.5 lakh crore and capital expenditure at Rs 12.2 lakh crore. It signals a delicate balancing act – a gradual fiscal deficit reduction to 4.3% of GDP alongside a proposed marginal improvement in the debt-to-GDP ratio of 55.6% – though that looks like a long shot.
An even larger question persists: How much of this ambitious game of projection will translate into actual developmental and welfare spending with measurable progressive social outcomes?
A closer reading of the budget, shifting away from headline allocations towards fiscal realism, is warranted in this context. The new Budget Estimate (BE) for FY 2027 places education at Rs 1.39 lakh crore, health at Rs 1.05 lakh crore, agriculture and allied activities at Rs 1.63 lakh crore, social welfare at Rs 62,326 crore and rural development at Rs 2.73 lakh crore.
When read against the persistent adjustments of the Revised Estimates (RE) over the BE in previous years, these figures highlight a familiar pattern – visible nominal increases are made in the budget, but they do not always translate into commensurate expenditure – or developmental gains.
Across major welfare ministries, revised estimates have been falling short of budget estimates – less is being spent than the government has been allocating. This indicates that budget formulation is consistently more ambitious than the annual revenues and cash balances allow the government to be.
In FY 2026, rural development contracted from a budget estimate of Rs 2.65 lakh crore to a revised estimate of Rs 2.12 lakh crore, a 20% adjustment. Social welfare declined from Rs 60,052 crore to Rs 50,053 crore, education from Rs 1.29 lakh crore to Rs 1.22 lakh crore, health from Rs 98,311 crore to Rs 94,625 crore and agriculture from Rs 1.59 lakh crore to Rs 1.51 lakh crore.
This closely replicates a pattern in the two previous financial years, 2025 and 2024, when mid-year........