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The government will kick-start internal consultations for the Union Budget 2027-28 on October 12 and the process will extend to mid-November. The meetings, chaired by Expenditure Secretary V Vualnam, will review expenditure requirements, receipts, scheme approvals and fiscal priorities before final allocations are determined.
Inputs gathered via these interactions with ministries and departments will be critical for fixing Budget Estimates (BE) 2027–28 and Revised Estimates (RE) for 2026–27 later.
The West Asia conflict provides additional context for this year’s exercise. Prolonged supply chain issues are already significantly impacting various receipts and expenditure components for the current year despite a recent let-up; these issues could potentially spill over to the next year.
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Strict Timelines
Financial Advisers (FAs) have been asked to ensure that all necessary information is correctly entered in the Union Budget Information System (UBIS) by October 6, 2026, sources said.
This year’s Budget exercise places particular emphasis on realistic and accurate projections. A “realistic projection for Revised Estimates (RE) 2026–27 and Budget Estimates (BE) 2027–28 is a pre-requisite” for sound fiscal management, according to the Budget Circular issued by the Budget Division of the Department of Economic Affairs.
Submission of information relating to non-tax revenue, interest receipts, loan recoveries, capital receipts, interest payments and loans to employees is due by October 6, 2026, followed by estimates of tax receipts by October 15, 2026. Disclosure statements under the FRBM framework are to be submitted by November 6, 2026. Data entry in the UBIS relating to RE/BE ceilings is required within 7 days of completion of the pre-Budget meetings.
The final ceilings will reflect on UBIS by the end of December 2026, with the Detailed Demand for Grants (DDG) to be finalised within one week of the final ceilings being intimated through UBIS. Notes on Demand for Expenditure are to be submitted within one day of filing the DDG (Final) in UBIS, while material for statements to be appended to the Demands for Grants and Expenditure Profile, as well as the Output-Outcome Monitoring Framework, is due within three days of filing the DDG (Final). The estimates of GDP from the CSO are expected by 7 January 2027.
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Mnistries and Departments have been advised to estimate expenditure carefully so as to avoid routine or frequent mid-year reappropriations. “Minimal mid-year additional resource requirements/mid-year reappropriations reflect good budgeting,” according to the circular. While preparing estimates, priority must first be given to committed and continuing expenditure before provisions are made for new schemes or expenditure items.
The preparation of estimates is expected to take into account actual expenditure up to September 30, 2026, expenditure during the corresponding period of the previous year, and actual expenditure for the entire preceding financial year.
For various schemes, balances under Central Nodal Agencies (CNA), Single Nodal Agencies (SNA), unspent Treasury Single Account (TSA) assignments and unused Mother Sanctions should similarly be reflected in the estimates.
The guidelines further stress fiscal discipline and efficient utilisation of allocated resources. Ministries and Departments are expected to avoid surrender of funds at the close of the financial year, particularly in view of repeated concerns raised by Parliamentary Committees regarding large savings in Grants.
The pre-Budget meetings will broadly examine the status of scheme appraisal and approval for the XVI Finance Commission cycle, fund requirements across expenditure categories, departmental receipts and non-tax revenues. Ministries and autonomous bodies are also expected to review opportunities to increase user charges to recover the current cost of services with a reasonable return on capital investment. The exercise will also capture efforts to recover non-tax revenue arrears and compliance with the applicable dividend policy by CPSEs will also be reviewed.
Macroeconomic Headwinds
The West Asia crisis and reduction in the size of gross domestic product (GDP) as per the new series may lead to some recalibration of key fiscal targets including reduction of debt-to-GDP and fiscal deficit target for FY27 and FY28. A reduction in GDP size has automatically made fiscal deficit target from 4.3% to 4.5% for FY27. However, the actual outcome would depend on to the extent additional fertiliser subsidies are required for fertiliser and cooking gas and revenue performance.
The Centre’s debt-to-GDP ratio will also likely rise to around 57% in FY27, compared with the Budget target of 55.6%. In the Budget for 2025, the Centre committed to calibrating annual fiscal deficits in a manner that ensures a steady downward trajectory in the debt ratio, to reach around 50% of GDP, plus or minus one percentage point, by March 31, 2031. This may need some recalibration.
TOPICSfiscal deficitThis article was first uploaded on August twenty-eight, twenty twenty-six, at eight minutes past seven in the evening. © The Indian Express (P) Ltd