By Union Budget 2025-26: Government’s Focus on Fiscal Discipline, Deficit Targets, and Addressing Emerging Challenges in Spending and Revenue Management
The government is expected to continue reducing its fiscal deficit in FY26 (Union Budget 2025-26), aiming for a target of 4.5% of GDP, according to Emkay Research. For FY25, the fiscal deficit is projected at 4.7%, while state governments are expected to keep their deficit at 3.2%.
In FY25, fiscal discipline has been helped by slower growth in spending (3.3% compared to the planned 8.5%) and strong revenue collection, particularly from personal income taxes and non-tax revenues.
However, challenges remain. Spending on elections, subsidies, agriculture, and defense could offset savings from areas where funds are not fully used, such as defense capital spending, BSNL recapitalization, and new government schemes. States are also facing financial pressure due to rising fixed costs, which now take up 55% of their revenue. This makes managing their budgets difficult, even though their capital spending remains stable and deficits are close to 3% of GDP (with a margin of +/- 0.2%).
Budget 2025 Live Updates: Will the Finance Minister focus on AI?
Budget 2025 Live Updates: Sanjay Sehgal, Founder and CEO of MSys Technologies, shared his thoughts on the upcoming Union Budget 2025-26. He emphasized that the tech sector is hoping for policies that support digital transformation and AI adoption. The industry also seeks more investment in sustainable digital solutions that encourage innovation while protecting the environment. Key expectations include tax breaks, R&D grants, and measures to streamline regulations, making it easier for tech companies to export their solutions. These steps are essential to strengthen India’s global leadership in technology, especially with competition from other countries. Sehgal also highlighted the importance of continuing the support for fintech and introducing greener initiatives to boost the tech sector’s focus on sustainability.
1 Comment