Opinion National Interest PoV 50-Word Edit

ThePrint On Camera Videos In Pictures

Society & Culture Around Town Book Excerpts Vigyapanti The Dating Story

More Judiciary Education YourTurn Work With Us Campus Voice

Opinion National Interest PoV 50-Word Edit

ThePrint On Camera Videos In Pictures

Society & Culture Around Town Book Excerpts Vigyapanti The Dating Story

More Judiciary Education YourTurn Work With Us Campus Voice

Fiscal discipline needs a new formula. Expenditure pressures to rise in FY27

The fiscal deficit should be contained through a tight vigil on subsidies by allowing necessary increases in retail prices of commodities like petrol, diesel and fertilisers.

The headline news from the provisional actual numbers released this week for the Union government’s finances during 2025-26 will understandably be about the fiscal deficit. For the fifth year running, Finance Minister Nirmala Sitharaman has managed to stick to her fiscal deficit target and, in some years, she has even improved upon it. Barring the first two years of her tenure as finance minister, when her actual fiscal deficit figures exceeded her set targets.

Sitharaman has stayed true to her promise of fiscal consolidation in all subsequent years. The provisional actual fiscal deficit at 4.4 per cent of gross domestic product (GDP) in 2025-26 confirms that trend.

But an equally significant development noticeable in these numbers is a mild relaxation in the government’s tight grip on expenditure that it maintained after the Covid pandemic subsided. If the ongoing challenges before the Indian economy in the wake of the West Asian crisis are any indication, the government may have to loosen its purse strings a little more this year.

Remember that the government’s aggregate expenditure rose sharply immediately after the Covid-19 pandemic. From about Rs 27 trillion, or 13.4 per cent of GDP in 2019-20, expenditure jumped by over 30 per cent in one year to Rs 35 trillion, or 17.7 per cent of GDP, in 2020-21. To place this rise in context, the expenditure growth in 2019-20, even without the impact of Covid, was about 16........

© ThePrint