New Delhi, Jan. 16 -- Union Finance Minister Nirmala Sitharaman will table the Union Budget for FY2026-27 on February 1, 2026, as the government remains on course to meet its fiscal deficit target of 4.4% of GDP, despite a low nominal GDP growth and higher capital expenditure.

Morgan Stanley expects India's fiscal consolidation to continue in FY27, albeit at a slower pace, with the central government likely to peg the fiscal deficit at 4.2% of GDP, compared with a targeted 4.4% in FY26. This would mark the shallowest pace of consolidation since FY23, while still remaining consistent with the government's medium-term debt reduction roadmap.

According to the global investment bank, a fiscal deficit of 4.2% in FY27 would help bring central...