India’s macro backdrop today looks unusually reassuring. Quarterly real growth has been firm, inflation is low, banks are reporting strong profits with low NPAs, and corporate balance sheets look healthier after years of deleveraging. That surface calm, however, is precisely why the Union Budget deserved to be read more as a stress test than as a celebration.

Why the calm may be contingent

Some of the “Goldilocks” shine is contingent. Growth momentum has leaned heavily on the Union government’s public capex push, which cannot remain the default engine indefinitely without testing debt dynamics. Meanwhile, low inflation has been helped by food-price deflation, which is not permanent. Pre-budget caution signals showed that the output of eight core industries grew only 2.6% year-on-year in April–December FY26.

Finance Minister Nirmala Sitharaman presented her record ninth consecutive budget with the theme of cautious pragmatism — trying to keep the fiscal glidepath intact while nudging the economy towards capability-building and growth enhancement.

Fiscal numbers and credibility

Total spending is budgeted to rise to Rs 53.5 trillion, up 7.7% over revised estimates, while revenue (excluding borrowings) is projected at Rs 36.5 trillion, up 7.2%. The fiscal deficit is budgeted at 4.3% of GDP, consistent with the promise of staying below 4.5%. This restraint matters for credibility — especially in a world where external financing conditions can tighten abruptly and where sovereign perception can affect the cost of foreign capital.

Borrowing pressure and bond markets

Between the Union government’s gross borrowing budgeted at Rs 17.2 trillion and an additional Rs 12.6 trillion of borrowing by........

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