Investment management firm OmniScience Capital has released its comprehensive budget outlook for 2026, projecting a Union Budget of approximately ₹53.5 trillion with a strategic focus on capital expenditure while maintaining fiscal discipline.

The report, titled “Driving India’s Growth through Capex Investments with Fiscal Discipline,” forecasts 15% growth in capital expenditure and estimates the fiscal deficit at 4.2% of GDP for FY27, signaling the government’s commitment to balancing growth investments with financial consolidation.

Structural Shift Towards Capital Creation

According to the analysis, India’s budgetary framework has witnessed a fundamental transformation over the past decade. Capital expenditure, which constituted roughly 20% of total budget spending in FY16, has climbed to over 30.6% in FY26, marking a decisive pivot towards infrastructure development and long-term economic growth.

“What we’re witnessing is not just an expansion in budget size, but a fundamental reorientation of fiscal priorities,” said Ashwini Shami, President and Chief Portfolio Manager at OmniScience Capital. “The sustained 15% CAGR in capital expenditure over the past decade, far outpacing revenue spending growth, demonstrates the government’s commitment to building productive assets that will drive India’s growth for years to come.”

This structural change reflects more than numerical increases. While the overall Union Budget has expanded steadily, capital expenditure has grown at nearly 15% CAGR over the past ten years, significantly outpacing revenue expenditure growth of 8.8%. This demonstrates a sustained policy emphasis on infrastructure development, productivity enhancement, and encouraging private sector investment.

Revenue and Deficit Projections

On the revenue side, tax collections are expected to grow at approximately 10% year-on-year in FY27, aligning with historical patterns and a nominal GDP growth assumption of 9%. Non-tax revenues are similarly projected to increase by 10%, driven by normalized dividend payouts and stable profitability of Central Public Sector Enterprises.

Borrowings are anticipated to rise modestly at 3% year-on-year, supporting the projected fiscal deficit range of 4.1-4.2% of GDP, consistent with the government’s ongoing fiscal consolidation roadmap.

Infrastructure Remains Central Focus

Capital expenditure continues as the primary fiscal instrument, with total public capital expenditure estimated at approximately ₹17 lakh crore in FY27, including grants for capital assets.

The report notes that while defence and core infrastructure remain dominant spending categories, there is a gradual rebalancing towards emerging priorities including technology, energy transition, and urbanization.

OmniScience Capital, managing assets worth ₹10 billion for high-net-worth individuals and family offices across 15+ countries, has built its reputation on scientific, research-led investing approaches over nearly a decade.

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Ayesha Aryan Rana | C. Janardhan | Aaryana Matasco

7700029963 | ayesha.aryan@aarayana.ind.in | aaryanamatasco@gmail.com