New Delhi, Jan. 20 -- India's fiscal policy is expected to be less contractionary from FY27 as the Centre prepares to pivot from a fiscal-deficit-focused approach to a debt sustainability framework, brokerage BofA Securities has noted in a pre-Budget note.

The shift, which will greater flexibility in public finances, comes as the government remains on track to meet its medium-term fiscal consolidation targets despite slower nominal GDP growth and sweeping tax cuts.

Finance minister Nirmala Sitharaman is set to present the Union Budget for FY2026-27 on 1 February, with the central government likely to meet its FY26 fiscal deficit target of 4.4% of GDP. BofA projects a modest reduction in the deficit to 4.3% of GDP in FY27, signaling a pa...