Finance Minister Nirmala Sitharaman
Finance Ministry has initiated budget exercise for fiscal year 2027-28 (FY28) by scheduling pre-budget meetings with various Central Ministries and Departments from October 12. The budget is likely to be presented on February 1, 2027.FY28 budget will be 10th successive budget for Finance Minister Nirmala Sitharaman, equating the number of budgets presented by Late Morarji Desai. She has already set a record by presenting 9 successive budgets, the highest by any finance minister. The Union budget, technically known as Annual Financial Statement, allocates money to 55 Central Ministries and Departments under 102 Demands for Grants besides giving estimates of Fiscal Deficit and roadmap for fiscal mechanism in coming years.“Realistic projection for Revised Estimates (RE) 2026-27 and Budget Estimates (BE) 2027-28 is a pre-requisite. Proper expenditure estimation by Ministries/ Departments would obviate need for routine/frequent mid-year reappropriations. Minimal mid-year additional resource requirements/mid-year reappropriations reflect good budgeting,” a budget circular issued by Economic Affairs Department of the Finance Ministry said.Chaired by the Expenditure Secretary, pre-budget meetings with Ministries and Departments will continue till mid-November. The Budget Estimates (BE) for 2027-28 as well as Revised Estimates (RE) for 2026-27 will be provisionally finalised after completion of pre-Budget meetings. Normally, revised estimates for ongoing fiscal year are based on actual expenditure of first six months (April-September) of the same FY. Budget estimates for next fiscal are based on actual income and expenditure of first 9 months (April-December) of the current fiscal.For the pre-budget consultations, Ministries have been asked to submit “measures to alter user charges levied by Ministries/Departments and Autonomous Bodies with a view to recover the current cost of providing services with reasonable return on capital investment.” Further Ministries have been asked to ensure that Schemes that have been discontinued, do not find mention in RE 2026-27. Similarly, Schemes that are not to continue beyond the year 2026-27, should not be provided any budgetary allocation for BE 2027-28.Although every budget has its own significance, but FY28 budget will be presented amid very challenging geo-political situation. Situation in West Asia is still tense, while various economies in Europe are slowing down. Amid all these, crude prices are seeing unusual swings. At the same time, rupee has depreciated significantly increasing the subsidy burden.Meanwhile, it is important to note that fiscal situation during first quarter of current fiscal has been under control. According to a July 31 note prepared Madan Sabnavis, Chief Economist at Bank of Baroda, the first quarter picture of central government accounts shows that the balances are under control with the fiscal deficit being 18.2 per cent of the total for the year which is only marginally higher than 17.9 per cent witnessed last year. Tax revenue collections too have been marginally higher at 24.6 per cent of target (24 per cent last year).Depending on how the war pans out and crude oil plays, it does look like that the expenditure on revenue account could be higher; and in case capex is maintained, there can be pressure on the fiscal deficit ratio. “In the stressed case there can be a slippage of 0.3-0.4% of GDP. Higher growth in GDP will provide statistical cushion, however,” he concluded.Published on August 29, 2026
