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Finance Minister Nirmala Sitharaman has said that the government is using almost the entire borrowing in 2025-26 towards financing capital expenditure. She said the effective capital expenditure in FY26 is Rs 15.48 lakh crore, which is 4.3 per cent of GDP. The fiscal deficit target is 4.4 per cent of the GDP for next fiscal. 

The minister said it indicates that the government is using almost the entire borrowed resources for financing effective capital expenditure. So the borrowings are not going for revenue expenditure or committed expenditure, or any of those kinds. It's going only for creating capital assets. So, in effect, the government intends to use about 99 per cent of borrowed sources to finance effective capital expenditure in the upcoming year.  

Talking on general Budget 2025-26, Sitharaman said the Budget has come in a time of immense uncertainties, changes in the global macro-economic environment, stagnating global growth and sticky inflation. She said the world's scenario in the last 10 years turned 180 degrees, and making Budget is more challenging now than ever before. She noted that Budget balances national development necessities with fiscal priorities. She said inflation trend, particularly food, appears to be moderating. Inflation management receives the highest priority of this government. Overall, retail inflation is within the notified tolerance band of 2-6 per cent.