As the Union government prepares for the 2026–27 Budget, it confronts a familiar but increasingly delicate policy challenge: how to support domestic growth amid an uncertain global environment while remaining firmly committed to its medium-term fiscal consolidation and debt-reduction goals. Economists broadly agree that some fiscal space exists for FY27, but caution that it is limited, conditional, and highly sensitive to macroeconomic assumptions, execution capacity, and the credibility of the Centre’s evolving fiscal framework.