The finance ministry will kick off the process to formulate the Union Budget for fiscal year 2027-28 on 12 October, initiating weeks of departmental reviews aimed at reining in unnecessary expenditure while funding ongoing development goals.
The pre-Budget meetings will be chaired by secretary (Expenditure) V. Vualnam, according to the Budget Circular 2027-28 issued by the department of economic affairs’ Budget Division on 27 August. The circular lays down guidelines for preparing the Revised Estimates (RE) for 2026-27 and Budget Estimates (BE) for 2027-28.
The meetings will review project approvals for the 16th Finance Commission cycle, departmental funding needs, total revenues (including fees and unpaid dues), and net spending estimates.
The government has set 6 October as the deadline for ministries and departments to enter the required information in the Union Budget Information System (UBIS). Financial advisers have been asked to ensure that data under Appendices I to VII is properly entered and that hard copies are submitted for cross-verification. The circular states that pre-Budget meetings will not be rescheduled due to delayed data entry.
The fiscal deficit target for 2026-27 (FY27) was set at 4.3% of GDP in the Budget presented in February 2026 (down from 4.4% in RE 2025-26). Analysts expect gradual further consolidation (possibly toward about 4%) for FY28, subject to revenue performance, subsidy pressures, and other factors, but no official target has been announced for 2027-28.
While preparing their estimates, ministries have been directed to first provide for committed and continuing expenditure before making provisions for new schemes or other new expenditure. They have to consider actual spending up to 30 September 2026, the corresponding period of the previous year, and actual expenditure during 2025-26.
Departments must also account for planned budget shifts, pending bills, project balances, and unused central fund allocations for the rest of the year.
The circular places particular emphasis on schemes continuing into the XVI Finance Commission period. All existing schemes proposed to continue during the cycle have to be appraised and approved by the competent authority. Ministries and departments have been asked to ensure that final Expenditure Finance Committee memoranda are forwarded to the department of expenditure before their respective pre-Budget meetings.
The finance ministry has also sought detailed explanations for significant changes in expenditure projections. Ministries must provide meaningful and specific notes wherever scheme-wise variations between BE 2026-27 and RE 2026-27, or between RE 2026-27 and BE 2027-28, exceed 10% of the relevant BE or RE.
On the receipts side, the circular asks ministries to report efforts to recover arrears on non-tax revenue and to provide details of internal resources available to autonomous and grantee bodies. They have also been asked to provide information on user charges and measures to alter them, with a view to recovering the current cost of providing services and achieving a reasonable return on capital investment. Subsidy calculations and their underlying assumptions will also have to be disclosed.
The Budget Division has prescribed separate deadlines for different components of the exercise. Estimates of tax receipts are due by 15 October, while disclosure statements required under the Fiscal Responsibility and Budget Management framework are due by 6 November. Ministries must complete the relevant UBIS data entry within seven days of their respective pre-Budget meetings.
The pre-Budget meetings will result in provisional expenditure ceilings being communicated to ministries and departments. Based on these ceilings, financial advisers will oversee the preparation of Detailed Demands for Grants (DDGs) in UBIS.
The final expenditure ceilings, however, will be set by the finance ministry after factoring in the government’s expenditure priorities and revenue projections. The final figures are to be reflected in UBIS by the end of December 2026 or early January 2027.
The finalised Detailed Demands for Grants will form the basis for preparing key Budget documents, including the Demands for Grants, Expenditure Budget, Expenditure Profile, Annual Financial Statement and Appropriation Bill, which will be presented to Parliament.
The Budget Circular also calls for realistic projections for RE 2026-27 and BE 2027-28, saying proper expenditure estimation should minimise the need for routine or frequent mid-year reappropriations. Budget-related data is to be submitted through UBIS, with the finance ministry stressing confidentiality throughout the budgeting process.
