Editor’s Note
As India prepares its 2026 budget, the focus is on navigating a complex global landscape—marked by rising protectionism and potential US tariff policies—to secure its position as the world’s third-largest economy. This article examines the strategic priorities and challenges ahead.
Amidst all the existing global challenges, the country’s upcoming budget for the next year, to be presented on February 1, could lay the foundation for making India the world’s third-largest economy. Despite the changing global order, the tendency of superpowers to worry only about themselves (protectionism), and the new policy of US President Donald Trump to use tariffs as a diplomatic weapon (tariff terror), India became the world’s fourth-largest economy in 2025 with a $4.18 trillion economy.
According to informed sources, the next three budgets are crucial for overtaking Germany to become the third-largest economy by 2030, the first glimpse of which may be seen in the upcoming budget. Sources and experts believe that the budget may focus on nurturing factors that enrich the economy, along with arrangements to boost self-reliance and exports. Sources said that to increase the size of the economy, the central government faces the major challenge of bringing the country’s overall debt under control, which in the upcoming budget could increase from 185 lakh crore to 196-200 lakh crore. The situation is such that about 12 lakh crore rupees are being spent annually on paying interest on the debt.
In the last 12 years, the size of the central government’s budget has increased from 15 lakh crore to over 50.65 lakh crore. This year, the budget size could reach around 54 lakh crore with a 10% increase. In the past ten years, the rapid growth of India’s economy has surprised the world, but experts say it is essential to take measures through the budget to maintain, and even increase, the speed of the current growth engine and implement them on the ground. The government is focusing on almost every sector, including IT, manufacturing, defense production, infrastructure, and agricultural support. In such a scenario, arrangements to remove obstacles and provide incentives for these sectors could be made in the upcoming budget.
While India’s economy is gaining momentum, the country’s rising debt remains a major challenge. In the last 12 years, the country’s debt has crossed from 53 lakh crore to over 185 lakh crore. This burden of debt and interest repayment could become an obstacle to the economy’s pace. India is the world’s top borrower from the World Bank, while it ranks seventh among the world’s top debtors. Countries like the USA, UK, France, and Italy are much more indebted than India. Measures to tackle this problem may be seen in the upcoming budget.
Due to Trump’s tariffs, eyes are on this year’s budget. After Trump’s tariffs, India has opened new areas for trade and exports, and the overall exports have not been significantly affected, but there is certainly uncertainty in the export sector. Potential measures in the budget could clarify the situation.
| Financial Year | Budget (Lakh Crore) | Total Debt (Lakh Crore) | Annual Borrowing Repayment (Lakh Crore) | Annual Interest Only (Lakh Crore) |
|---|---|---|---|---|
| 2025-26 | 50.65 | 185.94 | 15.86 | 12.76 |
| 2024-25 | 48.20 | 172.00 | 15.69 | 11.37 |
| 2023-24 | 44.43 | 155.13 | 17.86 | 10.63 |
| 2022-23 | 39.44 | 139.00 | 17.55 | 09.40 |
| 2021-22 | 37.93 | 161.02 | 15.84 | 08.05 |
| 2020-21 | 30.42 | 94.02 | 07.96 | 07.08 |
| 2019-20 | 26.98 | 86.07 | 07.03 | 06.25 |
| 2018-19 | 24.42 | 76.09 | 06.24 | 05.82 |
| 2017-18 | 21.46 | 69.03 | 05.94 | 05.30 |
| 2016-17 | 19.75 | 64.06 | 05.35 | 04.80 |
| 2015-16 | 17.77 | 57.09 | 05.55 | 04.56 |
| 2014-15 | 16.81 | 55.87 | 05.31 | 04.27 |
| 2013-14 | 15.59 | 53.01 | 05.02 | 03.74 |
(As of March each year)
Finance Minister Nirmala Sitharaman will present the budget on February 1.
Debt per capita: 4.8 lakh rupees as of March 2025.
Economist Prof. Ram Tripathi said.