The Finance Ministry issued a budget circular to kick off the budget exercise for fiscal year 2025-26. The budget is likely to be presented on February 1 next year.

This will be Finance Minister Nirmala Sitharaman’s eighth successive budget, and she has already surpassed Former Prime Minister Morarji Desai’s record of presenting six successive budgets. Overall, Desai presented 10 budgets, and Sitharaman is expected to surpass that record, too, during the third term of the Modi Government.

FY 26 budget will be the third budget in the span of 12 months as the full budget for the fiscal year 2024-25 in July because of the election. “Pre‐budget meetings chaired by Secretary (Expenditure) shall commence in the second week of October,” the circular issued by the Economic Affairs Department said. These meetings will continue till around mid-November 2024. “The Budget Estimates for 2025‐26 will be provisionally finalised after completion of pre‐Budget meetings,” it said.

These meetings are scheduled to discuss four key issues - requirement of funds for all categories of expenditures along with receipts of Ministries/ Departments, receipts of Departmentally‐run commercial undertakings, which are netted against the gross expenditure, non-tax revenues, including arrears of Non‐tax revenue and expenditure estimates on net basis.

Apart from Budget Estimates (BE) for next fiscal, these meetings are also likely to finalise Revised Estimates (RE) for current fiscal i.e., Fiscal Year 2024-25. Normally, RE for the current fiscal year is worked out based on trends of receipts and expenditure during the first six months (April- September) and BE for the next fiscal year based on the first nine months (April- December) of the ongoing fiscal year. Based on provisional figures discussed in initial meetings are given final shape in January once most data are available.

Once the meetings with the central government and Ministries are over, the finance minister is expected to meet various stakeholders, such as representatives of industry groups, economists, and trade unionists. These meetings are likely to be scheduled during the last week of December or early January. The finance minister will also convene meetings of States to seek their views on the Union Budget.

The forthcoming budget is important in many ways as it will show whether the target of reducing the fiscal deficit to 4.5 per cent of GDP has been achieved or not. Also, this could be the last budget in which the deficit is presented as a specific number, as there is an expectation that from FY 2026-27, the focus will be lowering the debt-to-GDP ratio, and the fiscal deficit could be given in the range.

It may be noted that Finance Minister Sitharaman in her budget speech on July 1, 2024 had said: “The fiscal consolidation path announced by me in 2021 has served our economy very well. From 2026-27 onwards, our endeavour will be to keep the fiscal deficit each year such that the central government debt will be on a declining path as a percentage of GDP.” With this kind of strategy, the government’s effort would be to bring down the ratio to below 50 per cent from the current estimated level of 56.8 per cent.

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