New Delhi: Finance Minister Nirmala Sitharaman will present the Union Budget 2026-27 in Parliament on Sunday at a time when the rupee is at record lows and foreign investors are steadily pulling money out of Indian markets. The Budget comes against a tricky global backdrop, even as headline domestic indicators like growth and inflation remain relatively strong.
Rupee pressure, market jitters set the tone
The rupee has depreciated nearly 7% over the past year and slipped below the 92 mark against the US dollar earlier this week. Equity markets have also remained under pressure, weighed down by sustained foreign portfolio investor (FPI) selling and global uncertainty.
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In January alone, FPIs withdrew ₹38,740 crore from Indian equities, a key factor behind the currency’s weakness and recent market volatility. “When capital flows become weaker, the currency becomes weaker as well,” Chief Economic Adviser V Anantha Nageswaran said recently, underlining the need to improve capital inflows.
Ninth Budget for Sitharaman, a rare milestone
This will be Sitharaman’s ninth consecutive Union Budget, the highest by any finance minister in a single stretch. She is now just one Budget away from matching the overall record held by former prime minister Morarji Desai, who presented 10 Budgets during his tenure as finance minister under multiple governments.
Notably, this is also the first time the Union Budget will be presented on a Sunday. While earlier governments shifted dates when February 1 fell on a weekend, the current administration has chosen to stick to the fixed schedule introduced in 2017 under Prime Minister Narendra Modi.
Growth looks solid, inflation under control
Despite market stress, the broader macro picture remains supportive. The Economic Survey 2025-26, tabled last week, pegged GDP growth at 7.4% for the current financial year and projected growth of 6.8% to 7.2% for 2026-27.
With inflation expected to moderate to around 3.5% in FY27, nominal GDP growth could touch 10%. Analysts believe this combination could support corporate earnings, provided the Budget maintains a balance between growth support and fiscal discipline.
Investors watching Budget signals closely
Market participants say the government’s fiscal stance will be closely tracked by foreign investors. “FIIs will be looking for clear signals from the Budget before deciding their strategy going forward,” said V K Vijayakumar, chief investment strategist at Geojit Investments Ltd.
He added that a fiscally prudent and growth-oriented Budget could help restore market confidence, especially if recent corrections in gold and silver prices push investors back towards equities.
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Fiscal maths may get tighter
While real GDP growth appears healthy due to easing inflation, slower-than-expected nominal growth could impact tax collections. According to SBI Research, nominal GDP growth relevant for Budget calculations may settle around 10.5–11%, which could put pressure on revenues.
SBI Research estimates the fiscal deficit at around 4.2% of GDP for FY27, with government borrowing costs likely in the 6.8–7.0% range in the coming fiscal year. This leaves limited room for error on the expenditure side.
What to watch on Budget day
As Sitharaman rises to present the Budget, the focus will be on measures to stabilise capital flows, support investment, and keep the fiscal consolidation path intact—without derailing growth. In a volatile global environment, the fine print of Budget 2026 could matter as much as the headline numbers.
