Govt Uses Entire Borrowings for Capex in FY'26: Sitharaman

New Delhi, Feb 11 (PTI) The government is using almost the entire borrowing in 2025-26 towards financing capital expenditure, Finance Minister Nirmala Sitharaman said on Tuesday.

She said the effective capital expenditure in FY'26 is Rs 15.48 lakh crore, which is 4.3 per cent of GDP.

The fiscal deficit target is 4.4 per cent of the GDP for next fiscal.

"It indicates that the government is using almost the entire borrowed resources for financing effective capital expenditure. So the borrowings are not going for revenue expenditure or committed expenditure, or any of those kinds.

“It's going only for creating capital assets. So, in effect, the government intends to use about 99 per cent of borrowed sources to finance effective capital expenditure in the upcoming year," she said in the Lok Sabha.

Replying to a discussion on General Budget 2025-26, Sitharaman said the Budget has come in a time of immense uncertainties, changes in the global macro-economic environment, stagnating global growth and sticky inflation.

The world's scenario in the last 10 years turned 180 degrees, and making Budget is more challenging now than ever before, she said, adding Budget balances national development necessities with fiscal priorities:

Sitharaman said inflation trend, particularly food, appears to be moderating.

"Inflation management receives the highest priority of this government. Overall, retail inflation is within the notified tolerance band of 2-6 per cent," Sitharaman said.

On the weakening of rupee against US dollar, the minister said various global and domestic factors are influencing the value of rupee against the US dollar.

The Indian rupee has depreciated 3.3 per cent against the US dollar between October 2024 and January 2025, but the decline has been lower than that in some of its Asian peers.

South Korean Won and Indonesian Rupiah depreciated by 8.1 per cent and 6.9 per cent, respectively in this period.

Further, all G-10 currencies also depreciated during this period by more than 6 per cent with Euro and British Pound depreciating by 6.7 per cent and 7.2 per cent, respectively.

Sitharaman also said there has been no cut in transfer to states and Rs 25.01 lakh crore will be transferred in FY'26.