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Nirmal Bang Report

Key Points 

Nirmal Bang expects the focus on fiscal consolidation to stay with the fiscal deficit for FY27 pegged at 4.2% of GDP with net market borrowing estimated at Rs 11.6 lakh crore and gross borrowing at Rs 15.1 lakh crore. The brokerage estimates central government debt to GDP at 55.2% in FY27 on track to meet the target of 50%+/-1% by FY31.

In line with the government's consolidation strategy, Nirmal Bang anticipates moderate capex growth of 9.5% in FY26, driven largely by elevated allocations to the defence sector. Continued emphasis on infrastructure and defence modernization is expected to shape the upcoming budget's capital outlay.

The brokerage expects the manufacturing‑led growth agenda to remain a core theme. This includes the potential extension of Production‑Linked Incentive (PLI) schemes, alongside support measures such as interest subvention and credit guarantees for sectors impacted by tariff pressures. Sustained policy support is viewed as critical to enhancing India's competitiveness across export‑oriented sectors. 

Sectors hit by tariffs may receive additional support in terms of interest subvention and credit guarantees.

Nirmal Bang expects continued focus on job creation and skilling, particularly targeting the youth. Emerging sectors such as AI and data centres may receive incentives to attract investments.

The brokerage also believes continued support through Open Market Operations will be required from the RBI to support domestic liquidity and to help the bond market to clear.

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