The Indian government plans to moderately improve its fiscal situation in the next fiscal year, reducing the fiscal deficit and debt while promoting manufacturing development in industries ranging from textiles to chips.

Finance Minister Nirmala Sitharaman serves as finance minister for ninth consecutive year budget speechThe government expects the fiscal deficit to fall to 4.3% of GDP in fiscal 2026-27 from 4.4% in 2025-26, it said on Sunday.

Sitharaman said the government expects India’s debt-to-GDP ratio to fall to 55.6% in the next fiscal year from 56.1% in 2025-26.

The finance minister pointed to the wider uncertainty facing India.

“Today, we face an external environment where trade and multilateralism are threatened, and access to resources and supply chains are disrupted,” Sitharaman said. “New technologies are changing production systems, while demand for water, energy and critical minerals is increasing dramatically.”

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

India’s benchmark Nifty 50 stock index fell about 1.7% shortly after Sitharaman addressed parliament.

in its economic survey The fiscal year 2026 report released on Thursday showed that India expects economic growth in fiscal year 2027 to be between 6.8% and 7.2%, surpassing most other major economies.

“As a growing economy with expanding trade and capital needs, India must also maintain deep integration with global markets, increase exports and attract stable long-term investment,” Sitharaman said.

Consulting firm PwC India said the budget puts the country “at a crossroads in taking the country to the next phase of transformation”.

“The Union Budget 2026-27 has an opportunity to define India’s role in financial stability while catalyzing businesses to be future-ready, especially as they seize the opportunities of AI adoption as well as the challenges of talent, infrastructure, governance and trust,” PwC India said in online comments.