The Indian government intends to moderately improve its fiscal position in the next financial year, aiming to reduce the fiscal deficit and debt levels while expanding support for manufacturing across various sectors from textiles to semiconductors.

Finance Minister Nirmala Sitharaman, in her ninth consecutive budget speech on Sunday, stated that the government expects the fiscal deficit to decline to 4.3% of GDP in the fiscal year 2026-27, down from 4.4% in 2025-26.

Sitharaman said the government anticipates India's debt-to-GDP ratio will decrease to 55.6% in the coming year from 56.1% in 2025-26.

She also pointed out that India is facing broader external uncertainties.

Sitharaman stated, "We are in an external environment where trade and multilateralism are being challenged, and access to resources and supply chains is being disrupted. New technologies are reshaping production systems while substantially increasing the demand for water, energy, and critical minerals."

The government plans to promote manufacturing development in seven key sectors, including semiconductors, rare earth magnets, pharmaceuticals, chemicals, capital goods, textiles, and sports goods.

Shortly after Sitharaman's address to parliament, India's benchmark Nifty 50 index fell by as much as 1.7%, eventually closing down 1.96%.

In an economic survey for the 2026 fiscal year released on Thursday, India projected economic growth for the 2027 fiscal year to be between 6.8% and 7.2%, a pace that would outstrip most major economies.

Sitharaman said, "As a consistently growing economy with expanding trade and capital requirements, India must continue to integrate deeply into global markets, expand exports, and attract stable, long-term investment."

Consulting firm PwC India stated that this budget places India "at a crossroads to propel the nation into the next phase of transformation."

In an online commentary, PwC India said, "The Union Budget for 2026-27 presents an opportunity to achieve fiscal stability while also preparing businesses for the future—particularly in seizing the opportunities of AI adoption while addressing challenges related to talent, infrastructure, governance, and trust."