Budget 2026–27: Focus on Growth Management in Global Uncertainty and Fiscal Prudence
The Union Budget 2026–27 arrives at a pivotal moment for the Indian economy. The Budget also marks Finance Minister Nirmala Sitharaman’s ninth consecutive Union Budget delivered on a Sunday, a record in Indian history. This continuity reflects both political stability and the government’s commitment to predictable, market-friendly fiscal planning. With global growth slowing, merchandise exports underperforming, and international trade becoming increasingly fragmented due to higher tariffs and investment restrictions, external headwinds have intensified. In response, this Budget reflects a cautious yet purposeful strategy: preserve domestic growth momentum through fiscal prudence while laying the groundwork for long-term competitiveness.
Strategic allocations for key sectors underscore a shift toward long-term competitiveness. ₹40,000 crore for the India Semiconductor Mission 2.0, ₹10,000 crore under the Biopharma Shakti initiative, and ₹100 billion for biopharma manufacturing over five years are designed to integrate India into technology-intensive global value chains and diversify exports.
Macroeconomic conditions remain favourable, with GDP growth projected at nearly at 7.4% and inflation low and stable, creating a rare “Goldilocks” environment. This allows fiscal consolidation without immediate growth sacrifice. Targeted support for labour-intensive sectors and MSMEs—including a ₹10,000 crore MSME Growth Fund and a ₹25,060 crore Export Promotion Mission—reflects a focus on employment and export resilience.
The fiscal deficit is targeted to decline from 5.6% of GDP in FY23 to 4.3% in FY27, signalling a steady consolidation path that reinforces macro stability and investor confidence. This is complemented by a strong public investment push, with infrastructure expenditure at ₹12.2 trillion (up 8.8% from the previous year), aimed at supporting demand and productivity
However, risks remain. Despite a lower deficit target, gross market borrowings remain high at about ₹14.8 lakh crore, and total expenditure as a share of GDP is moderating. In this context, slower progress on structural revenue reforms could constrain discretionary spending on welfare, education, and human capital investment—areas essential for inclusive and sustainable growth.
In sum, Budget 2026–27 seeks to balance growth management with fiscal discipline, leveraging favourable domestic conditions while preparing for external uncertainties. Its ultimate success will depend on how effectively fiscal stability is translated into structural reform and long-term competitiveness.
By Dr. Hemangi Kelkar, Assistant Professor, NMIMS Navi Mumbai.
The Budget 2026 serves more as a comprehensive framework for a Viksit Bharat, propelling a new phase of high-productivity growth. By establishing the Minimum Alternate Tax (MAT) as a straightforward, 14% final tax rate, it alleviates the ‘tax-credit’ complications for Corporates, thereby offering the fiscal certainty necessary for long-term capital investment. Concurrently, the budget signifies a strategic transition towards the diaspora by increasing NRI investment limits to 10% and simplification of multiple rules, effectively positioning Global Indians as primary equity stakeholders in the domestic markets. This strategy transcends mere numerical values; it focuses on constructing a self-reliant ecosystem. While the middle-income class receives targeted relief solely through simplified tax filing regulations, the budget’s true influence is felt on the supply side—reducing customs duties on essential raw materials and aviation components, alongside various announcements aimed at the manufacturing sector to decrease industrial expenses. By eliminating credit obstacles for MSMEs, promoting the growth of women-led businesses, and emphasizing emerging sectors such as Tourism, Design, and Data Centers, the government is stimulating consumer demand while systematically addressing supply-side issues and bridging the divide between grassroots potential and global aspirations. With a strategic focus on Education-to-Employment pathways and the expansion of the Credit Guarantee Scheme to ₹10 crore, the government is not just providing capital—it is designing a self-sustaining ecosystem. Despite some shortcomings and certain sectors being missed from the budget speech as Defence and FII’s, the budget rightly sets a positive tone emphasizing on uniform growth across all states, transforming our demographic dividend into a hub of innovation and self-reliant employment.
By Dr. Esha Khanna, Assistant Professor, Sarla Anil Modi School Of Economics, SVKM’s NMIMS, Mumbai
The finance minister presented a lackluster budget without any big-bang announcements, and it’s a mixed bag. The fiscal and borrowing discipline, focus on MSMEs, rural India, and the northeast, and specific announcements such as environmental sustainable corridors, rare earth corridors, chemical parks, and 12.2L crore of capex for FY26-27 have been major positives. However, the flip-flop on buyback taxation, no major announcement to attract FDI or FPI, the hike in STT, and the lack of any coherent narrative give the impression that it’s a missed opportunity to provide a signal to stem the one-way decline in the rupee and attract investments to India amid ongoing geopolitical turmoil.
By Dr. Mayank Joshipura, Professor (Finance) and Vice Dean, Research, SBM-NMIMS, Mumbai.
4. The Union Budget 2026–27 reflects a calibrated approach that balances fiscal consolidation with growth-oriented public investment, anchored in the long-term vision of Viksit Bharat 2047.
Emphasising “reform over rhetoric and people over populism,” the government has prioritised structural reforms, macroeconomic stability, and prudent fiscal management while continuing to support key sectors of the economy.
A clear commitment to reducing the fiscal deficit and debt-to-GDP ratio signals credibility and discipline, which is essential for sustaining investor confidence and long-term economic resilience.
At the same time, the Budget reinforces the role of the state as a catalyst for growth through higher capital expenditure, infrastructure development, and risk-sharing mechanisms to crowd in private investment.
Strong thrusts on manufacturing, strategic technologies, MSMEs, healthcare, education, and skills underline the focus on employment generation, self-reliance, and global competitiveness.
Social inclusion, regional development, and future-ready capabilities—especially in AI, semiconductors, and services—form integral pillars of the strategy.
Overall, the Budget seeks to ensure that economic expansion is not only faster but also broader, more sustainable, and inclusive, aligning near-term policy actions with India’s long-term developmental aspirations.
CA (CMA) Pankaj Kapoor, Assistant Professor, School of Commerce, NMIMS Chandigarh
