New Delhi, Jan. 27 -- The Union Budget for FY25-26 is expected to prioritize fiscal prudence while addressing muted growth trends through targeted reforms, according to a report by Phillip Capital.

The report emphasizes continued investment in core capital expenditure (capex) in areas like railways, roads, and defence, though a significant overall capex increase is deemed unlikely.

Phillip Capital projects the fiscal deficit for FY26 to range between 4.5 per cent and 4.6 per cent of GDP, while FY25 is expected to close slightly higher at 4.6 per cent-4.7 per cent.

In case the government opts for fiscal expansion in FY26, raising the deficit to 4.7 per cent-4.8 per cent, the report anticipates growth-oriented measures to stimulate the e...