Framing the FY27 Budget as growth-focused yet fiscally responsible, Finance Minister Nirmala Sitharaman on Wednesday defended it in the Lok Sabha. She highlighted a sharp push in capital spending and higher transfers to states.

Replying to the General Discussion, she said capital expenditure has been increased by 11.5% in FY27. In addition, effective capex is estimated at 4.4% of GDP, or around Rs 17 lakh crore. She described public investment as a “force multiplier” to drive growth and advance the Viksit Bharat vision.

The Centre has also raised the capital grant under the Special Assistance to States for Capital Investment (SASCI) scheme to Rs 2 lakh crore, following recommendations from state finance ministers. Sitharaman said several states have completed key infrastructure projects under the scheme since 2021.

The fiscal deficit for FY27 has been pegged at 4.3% of GDP. She clarified that this is being achieved through improved revenue mobilisation and calibrated spending, not by cutting expenditure. Gross tax receipts are projected to grow 8%, while bank credit has expanded 13%, indicating adequate liquidity.

Addressing opposition concerns, she said 41% of tax revenues are devolved to states as per Finance Commission norms. The calculation is done after excluding cess and surcharge. Over Rs 25 lakh crore, including Centrally Sponsored Schemes, will be transferred to states in FY27. This amount is higher than the FY26 revised estimates and FY25 actuals.

She also noted that the debt-to-GDP target was incorporated in the amended FRBM Act in 2018. Among sectoral measures, she highlighted the training of 10,000 tourist guides. She also highlighted the rollout of Bharat Vistaar, an AI-based multilingual platform aimed at boosting farm productivity.

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