India’s fiscal architecture is undergoing a transformation, signalling a maturing approach to public finance. Union Budgets since 2021–22 have reflected a shift toward transparent fiscal consolidation, where the quality and composition of expenditure matter as much as the headline deficit number. Central to this transition is the rising prominence of capital expenditure, increasingly recognised as both a growth lever and a structural tool for macroeconomic stability.India’s current fiscal path must be contextualised within the Fiscal Responsibility and Budget Management framework, enacted in 2003, which originally targeted a fiscal deficit of 3.0% of GDP. While this target was relaxed post-COVID, the fiscal deficit is projected to moderate to 4.4% of GDP in 2025-26 from a peak of 9.1% during the pandemic year. The government now aims to keep the fiscal deficit in each year until 2030-31 at levels that ensure Central Government debt follows a declining trajectory, targeting a debt-to-GDP level of about 50% by March 2031.
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