Hike defence, advanced tech capex in Budget, say analysts

The Budget should look at increasing the share of capex in total government expenditure and such spendings should be directed towards advanced technology sectors such as AI, GenAI, space, robotics and advanced infrastructure, EY Economy Watch said on Wednesday.

It said that the scope for additional tax reforms in personal income tax and GST may now be limited. In spite of the revenue shortfall in FY26 compared to the budget estimates, EY expects that the fiscal deficit target of 4.4 per cent of GDP may still be achieved.

“Going forward, it may be desirable to continue on the path of fiscal consolidation and target a fiscal deficit to GDP ratio of 4 per cent in FY27,” the EY report said.

It further said that fiscal consolidation needs to be continued to create space for private investment by expanding their access to the investible surplus in the economy.