Govt continues fiscal consolidation while boosting capital expenditure: Finance Ministry review

The report said fiscal policy is being calibrated to maintain macroeconomic stability while continuing public investment in infrastructure and productive assets.

"Fiscal policy continues along a consolidation path while maintaining the quality of expenditure," the review noted, adding that capital spending remains a key instrument for sustaining economic growth.

Highlighting spending trends in the current financial year, the report said capital expenditure grew by 11.2 per cent during April-January of FY26, while revenue spending remained largely contained.

"Capital expenditure grew by 11.2 per cent, while revenue expenditure remained at 1.2 per cent, indicating continued prioritisation of infrastructure creation and asset-building," the review said.The Finance Ministry said the government's fiscal indicators have improved during the year due to stronger revenue mobilisation and expenditure prioritisation.

"The fiscal deficit up to January was lower than in the corresponding period of the previous year, reflecting improved fiscal management," the report stated.

Looking ahead, the Union Budget 2026-27 continues the consolidation path while preserving capital spending to support growth.

"The Union Budget 2026-27 continues the fiscal consolidation trajectory while sustaining capital spending to support infrastructure-led growth," the review noted.

The report added that the government has set a fiscal deficit target of 4.3 per cent of GDP for FY27, signalling its intent to gradually reduce deficits while maintaining investment momentum.

"The fiscal deficit for FY27, now projected at 4.3 per cent, reflects a calibrated balance between consolidation and growth," it said.

According to the review, the continued focus on capital expenditure is aimed at strengthening productive capacity, crowding in private investment, and sustaining long-term economic growth.

Overall, the Finance Ministry said India's macroeconomic environment remains stable, supported by solid growth momentum, moderate inflation, and continued reform efforts. (ANI)