New Delhi, Dec. 23 -- As the government prepares to present the Union Budget for the Financial Year 2027, the broad contours of fiscal strategy are coming into focus namely support growth through capital spending, while staying firmly committed to deficit reduction, said a report by EY.

EY in its Economy Watch - Monitoring India's macro-fiscal performance, said India enters the Budget season on a strong economic footing.

Real GDP grew 8.2% in Q2 FY26, driven by balanced expansion in manufacturing and services, while inflation has fallen to a near-record low of 0.7%, giving policymakers room to prioritise growth without stoking price pressures, it highlighted.

According to EY, the government is likely to double down on public capital ex...