Union Budget 2026: GST rationalisation, fiscal discipline -- Markets' wishlist for Nirmala Sitharaman

With the Union Budget 2026-27 approaching, expectations are converging around one central theme: sustaining India’s growth momentum while maintaining fiscal discipline. Against a backdrop of global economic uncertainty, volatile capital flows and slowing growth in major economies, policymakers face the challenge of reinforcing confidence without compromising macroeconomic stability.

Economists, market participants and industry leaders are closely tracking how the government plans to align public spending, reforms and fiscal consolidation in the year ahead.

Balancing growth ambitions with fiscal prudence

As India navigates a complex global environment, fiscal discipline has emerged as a key anchor for economic stability. Economists note that macro indicators such as inflation, growth and policy credibility are closely tied to how prudently public finances are managed. The upcoming Budget is expected to signal continuity in fiscal consolidation while ensuring that growth-enabling measures remain intact.

Economists have underscored that fiscal discipline will be critical as the government charts its Budget strategy, particularly given its impact on inflation, growth and policy autonomy. 

Dr Kirti Sharma, Associate Professor from Great Lakes Institute of Management, Gurgaon, said, “The biggest challenge for the government in Budget 2026 is to pursue progress with prudence. Fiscal discipline is important as macroeconomic indicators like inflation and GDP growth are dependent on it, and true policy autonomy will be reflected if RBI dividend maximisation comes through structural improvements rather than prevailing economic conditions.”

Markets seek stability and credibility

From the market’s standpoint, expectations from Budget 2026 are centred on policy continuity, credibility and execution amid an uncertain global backdrop.

Pranav Haridasan, MD and CEO of Axis Securities, said that markets are eyeing continuity, credibility, and effective execution of policies. He added that the government has undertaken several structural reforms, including GST rationalisation, direct tax simplification, and extensive digital and compliance initiatives that have substantially improved transparency and increased formalisation across the economy over several years.

"In a difficult global environment marked by geopolitical uncertainty, slowing growth in major economies, and volatile capital flows, a stable and predictable policy approach will be crucial. Continued focus on infrastructure, manufacturing, defence and the energy transition will remain key to crowding in private investment and supporting medium-term earnings visibility. At the same time, calibrated measures to support domestic consumption, particularly for the urban middle-income and rural segments, can help strengthen demand as inflation moderates and financial conditions ease. From a capital markets perspective, stability in taxation and policy consistency matter more than headline announcements. With India increasingly positioned as a structural growth market for global and domestic investors, a pragmatic approach to capital market taxation and long-term savings will be important to sustain participation and depth. A growth supportive, fiscally disciplined Budget that reinforces confidence in India’s macro framework would be a clear positive for both the economy and markets".

Capex, consumption and capital markets in focus

Continued emphasis on public capital expenditure is widely expected to remain a cornerstone of the government’s strategy. Infrastructure, manufacturing, defence and the energy transition are seen as key sectors for crowding in private investment and supporting medium-term earnings visibility. At the same time, economists and market participants believe that calibrated measures to support domestic consumption, particularly among urban middle-income households and the rural segment, could strengthen demand as inflation moderates.

In capital markets, stability in taxation and long-term policy clarity are expected to matter more than short-term incentives. With India increasingly viewed as a structural growth market, experts argue that a growth-supportive yet fiscally disciplined Budget could reinforce confidence across domestic and global investors.