India: Weak growth impulse and fiscal risks – Societe Generale

Societe Generale’s Kunal Kundu reviews India’s FY27 Union Budget, highlighting policy continuity and fiscal consolidation in a context of geopolitical strains and currency weakness. The note flags modest allocations to employment schemes, questions execution of six focus areas, and warns that without stronger revenues, capital expenditure may again be cut to meet the 4.3% of GDP deficit target.

Fiscal consolidation but capex at risk

"Amid geopolitical strains, trade uncertainty, currency weakness, and investor scepticism over growth metrics, India’s FY27 Union Budget presented on 1 February 2026, emphasised policy continuity and fiscal consolidation."

"Among the various announcements, focus on data centres and GCCs (Global Capability Centres) would likely provide a major tailwind to one of India’s important growth drivers as will the ramping up of support for India’s nuclear energy programme."

"The budget proposed six major focus areas. However, implementation gaps remain keys areas of concern for India’s ability to meet its stated targets."

"Despite a stated focus on employment since 2024, allocations for employment generation schemes have been modest – and actual spending even more so."

"If the FY27 deficit target is prioritised without stronger revenues, capex could again become the adjustment lever."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)