The Indian government will target a narrower fiscal deficit of 4.4% of gross domestic product for fiscal year 2025-26, down from a revised 4.8% for the current year, Finance Minister Nirmala Sitharaman said in the budget on Saturday.

India is set to meet its 4.5% fiscal deficit target by 2026, balancing economic growth and fiscal prudence, said BofA. The upcoming budget may boost capital expenditure to reignite private sector growth while maintaining a stable revenue outlook and achieving medium-term fiscal objectives.

India's fiscal deficit for April-December was 9.14 trillion rupees ($105.58 billion), or 56.7% of the estimate for the financial year, government data showed on Friday. Net tax receipts for the first nine months of the current financial year were at 18.