The Union budget, set to be tabled next month, is likely to see a rise in defence and capital expenditure as the government balances its fiscal consolidation agenda against growing domestic and external spending pressures, as per a report by BMI, a Fitch Solutions firm. While the research firm believes that the government will target a 4.3% fiscal deficit for FY2026-27 in line with its fiscal consolidation agenda, it has forecast the actual deficit equalling 4.6%.