Budget 2025 | Seven key factors to track in the budget speech

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Subscribe to enjoy similar stories. Finance minister Nirmala Sitharaman will on Saturday deliver her eighth Union budget in a row as the National Democratic Alliance government that returned to office last year with reduced majority in Lok Sabha seeks to add vigor to economic growth and create more jobs. It is easy for a government to usher in reforms early into its term as there may not be any immediate political risks.

Mint takes a look at key factors to watch out for in the Union budget for 2025-26. The Union Budget makes an estimate of gross domestic product (GDP) for the financial year in nominal terms, on the basis of which key fiscal indicators such as fiscal deficit are expressed. Bank of Baroda on Friday said India's nominal GDP could grow at 9.8-10.3% in FY26.

That is, India’s economy is likely to reach the size of ₹355-357 trillion next fiscal year. Going by that, a 4.5% fiscal deficit—the gap between the government’s revenue and spending met through borrowing—for next financial year could translate to ₹16 trillion. Sticking to the fiscal glide path would indicate the government’s fiscal prudence and leave room for private sector borrowings.

The government is well on its way to reducing India's fiscal deficit to 4.9% of GDP in the current financial year, down from 5.6% in FY24, said Suman Chowdhury, executive director and chief economist at Acuité Ratings & Research Ltd. The government has also committed to a roadmap outlined in FY22 to reduce its fiscal deficit to below 4.5% of GDP by FY26. The government’s financial statement will indicate how much it is likely to borrow from the market and how much it could raise from sources like the National Small Savings Fund (NSSF) to finance fiscal deficit.