In a post-Budget press conference held on February 1, 2026, Union Finance Minister Nirmala Sitharaman addressed questions regarding the current inflationary environment in India. Acknowledging the importance of inflation as an economic indicator, Sitharaman stated that "inflation is down in India, and it is remaining there for some time". She emphasized that while inflation is not the only factor influencing economic conditions, the government's assumption of "realistic nominal GDP projections" remains firm.
The Finance Minister's remarks came after the presentation of the Union Budget 2026, which outlines the government's economic roadmap for the upcoming fiscal year. The budget is designed to sustain economic growth, maintain fiscal discipline, and implement reforms to protect the Indian economy from global trade challenges.
The FY27 Budget is set against a backdrop of global uncertainties, including geopolitical tensions, fluctuating commodity prices, and inconsistent monetary easing by major central banks. Simultaneously, the government is facing domestic pressure to stimulate consumption, accelerate job creation, and increase capital spending, all while keeping the fiscal deficit under control.
The Indian economy is predicted to grow by 7.4% in the current financial year, with inflation projected to be approximately 2%. The fiscal deficit for the year is targeted at 4.4% of GDP. Moody's Ratings has affirmed India's long-term local and foreign-currency sovereign ratings and maintained a stable outlook, citing the country's strong economy and reliable domestic funding for its budget deficits.
The Union Budget 2026 prioritizes infrastructure development, particularly in regions like West Bengal, with initiatives such as freight corridors and industry promotion. The budget also includes measures to boost manufacturing, offering a tax holiday for foreign companies providing cloud services using Indian data centers and exempting minimum alternate tax for non-residents paying tax on a presumptive basis. The government is increasing capital expenditure to Rs 12.2 lakh crore from Rs 11.2 lakh crore in the previous year.
Responding to questions about rural employment, Sitharaman clarified that the new VB-G RAM G Act is not solely about monetary allocation but focuses on improving the efficiency of the scheme on the ground. She stated that inefficiencies have been addressed, and the money allocation reflects the government's commitment to rural employment.