The Ministry of Finance has initiated the budget exercise for the fiscal year 2027-28 (FY28). Pre-budget meetings with various Central Ministries and Departments began on October 12, chaired by the Expenditure Secretary, and are scheduled to continue until mid-November.
The upcoming Union budget is likely to be presented on February 1, 2027. This will be the 10th successive budget presented by Finance Minister Nirmala Sitharaman, equating the number of budgets presented by Late Morarji Desai. Sitharaman already holds the record for presenting nine successive budgets.
Technically known as the Annual Financial Statement, the Union budget allocates funds to 55 Central Ministries and Departments under 102 Demands for Grants, alongside providing estimates of the fiscal deficit and the roadmap for future fiscal mechanisms.
A budget circular issued by the Economic Affairs Department of the Finance Ministry emphasized the importance of realistic projections. It noted that proper expenditure estimation by ministries and departments obviates the need for routine mid-year reappropriations, which reflect good budgeting practices.
Following the completion of the pre-budget meetings, the Budget Estimates (BE) for 2027-28 and the Revised Estimates (RE) for 2026-27 will be provisionally finalized. Ministries have been instructed to submit measures to alter user charges to recover the current cost of services with a reasonable return on capital investment. Additionally, discontinued schemes or those not continuing beyond 2026-27 must not be included in the revised or budget estimates.
The FY28 budget preparations come amid a challenging geopolitical climate, characterized by ongoing tension in West Asia, economic slowdowns in parts of Europe, unusual swings in crude oil prices, and significant depreciation of the rupee that increases the subsidy burden.
Meanwhile, the fiscal situation during the first quarter of the current fiscal year remained under control. According to data cited from a Bank of Baroda note by Chief Economist Madan Sabnavis, central government accounts showed the fiscal deficit at 18.2 percent of the annual total, marginally higher than the 17.9 percent recorded in the previous year. Tax revenue collections reached 24.6 percent of the target, compared to 24 percent previously.
However, analysts note potential pressures. Depending on the trajectory of conflicts and crude oil prices, revenue account expenditure could rise. If capital expenditure is maintained, there may be pressure on the fiscal deficit ratio, potentially leading to a slippage of 0.3 to 0.4 percent of GDP in a stressed scenario, though higher GDP growth could provide a statistical cushion.
"The initiation of the FY28 budget exercise highlights the government's focus on fiscal discipline and expenditure management amid global economic uncertainties. For businesses and entrepreneurs in the Indian startup ecosystem, early planning and realistic resource allocation by central ministries provide stability and clear policy signals. Monitoring fiscal deficits, tax collections, and subsidy burdens remains crucial as macroeconomic factors continue to influence capital availability and market sentiment." — Dr. Shishir Gupta, Founder & CEO, StartupLanes
