Union Budget 2026: Government Pegs FY27 Net Market Borrowing at ₹11.73 Lakh Crore

FY27 Market Borrowing Plan Under Union Budget 2026

The Union government has set its net market borrowing for FY27 at ₹11.73 lakh crore , signalling a calibrated increase in fund mobilisation to sustain capital expenditure while remaining aligned with the fiscal consolidation roadmap. The announcement was made by Nirmala Sitharaman while presenting the Union Budget 2026 in Parliament.

Borrowing Levels and GDP Context

As per the Budget documents, the FY27 net market borrowing works out to nearly 3 per cent of India’s GDP . Gross market borrowing for the year has been fixed at ₹17.20 lakh crore , equivalent to about 4.4 per cent of GDP .

This represents a gradual increase over previous years, with net borrowings of ₹10.7 lakh crore in FY26 (revised estimates) and ₹9.0 lakh crore in FY25. The government has positioned this rise as part of a measured expansion that remains consistent with medium-term fiscal planning.

Capital Expenditure Remains the Priority

Officials have stressed that the bulk of the additional borrowing will be directed towards capital expenditure , including infrastructure, logistics, and asset creation. The Centre continues to argue that capex-led spending has a higher growth multiplier and strengthens long-term productive capacity compared to revenue expenditure.

This strategy is central to the government’s view that borrowing for asset creation improves the quality of public spending and supports sustainable economic growth.

Fiscal Consolidation and Market Impact

Despite the higher absolute borrowing numbers, the government reiterated that fiscal consolidation remains on course , with the fiscal deficit steadily declining as a proportion of GDP. Market analysts note that elevated gross borrowings could increase bond supply and exert some pressure on yields. However, they also point out that a transparent borrowing calendar and a clear consolidation trajectory help maintain investor confidence and market stability.

Important Facts for Exams

• Net market borrowing refers to fresh borrowing after adjusting for repayments.

• Gross market borrowing includes total issuances before redemptions.

• FY27 net borrowing is pegged at ₹11.73 lakh crore.

• Capital expenditure is considered more growth-enhancing than revenue spending.

Medium-Term Public Finance Outlook

The FY27 borrowing programme reflects continuity in India’s fiscal strategy: sustaining a capital expenditure-led growth model while reinforcing credibility on fiscal prudence. With gross borrowings of ₹17.20 lakh crore and a strong emphasis on productive spending, the government aims to balance growth needs with macroeconomic stability.

The success of this approach will depend on effective project execution, revenue buoyancy, and stable financial market conditions as India navigates its medium-term public finance objectives.