Archive · 5 Sep 2026
India Begins FY28 Budget Planning Amid Subsidy and Deficit Pressures
India has started planning its government budget for the year after FY27.
The Finance Ministry asked government departments to estimate their spending more carefully.
This is meant to reduce the need to move money between programmes during the year.
Meetings with farmers, businesses and social-sector groups will begin on October 12, 2026.
A conflict in West Asia has raised the prices of some important goods, including fertiliser and fuel.
That could make government subsidies more expensive.
The government has already spent a large share of its planned infrastructure budget in the first three months of FY27.
An economist expects the next budget to be somewhat larger while the deficit declines only gradually.
The Ministry of Finance has begun preparing India’s FY28 Union Budget and requested realistic FY27 revised estimates and FY28 projections from ministries.
Departments were told to improve expenditure estimates, avoid frequent mid-year reallocations and align requested allocations with competent-authority approvals.
Pre-Budget consultations with agriculture, MSMEs, industry and social-sector stakeholders are scheduled to begin on October 12, 2026.
Higher commodity prices linked to the West Asia crisis could increase fertiliser and food subsidy costs during FY27.
Economist Madan Sabnavis expects the FY28 Budget to grow 4-5%, with the fiscal deficit easing gradually toward about 4%.
- Who
- The Ministry of Finance, Union government ministries and departments, stakeholders, and economist Madan Sabnavis.
- What
- The FY28 Union Budget exercise has begun, alongside reviews of FY27 spending, revenues and subsidy pressures.
- When
- The exercise has begun; consultations are scheduled to start on October 12, 2026, while the spending figures cover the first three months of FY27.
- Where
- India, through the Union government and its Ministry of Finance.
- Why
- To obtain realistic spending projections, limit mid-year fund reallocations and respond to higher subsidy costs and commodity prices.
- FY27 capital expenditure budget
- Rs 12.21 trillion; 28% was spent in the first three months, compared with about 24.5% a year earlier.
- FY27 total receipts
- About Rs 36.5 trillion budgeted; nearly 29% was received in the first three months.
- FY27 total expenditure
- About Rs 53.4 trillion in the Controller General of Accounts data; roughly 25.4% was spent in the first three months.
- Fertiliser subsidy
- More than half of the Rs 1.70 trillion FY27 budget had reportedly been used.
- Food subsidy
- The bill could exceed the Rs 2.28 trillion FY27 estimate and reach about Rs 2.5 trillion.
- FY28 Budget outlook
- Madan Sabnavis expects the overall Budget size and capital expenditure to rise by about 4-5%.
- Fiscal deficit outlook
- The deficit could decline from about 4.3% toward 4%, according to Sabnavis; the article also cites total FY27 spending as Rs 53.5 trillion elsewhere.