Budget 2026: A Budget brimming with ideas - and fiscal discipline

Union Budget 2026 | It is rare for a Budget to check all the boxes for a fast-growing and vibrant democracy like India. It is rarer still to repeat that feat year after year. Finance Minister Nirmala Sitharaman has done that once again. The 2026-27 Budget is an all-encompassing Budget that includes essential tasks of governance, growth and fulfilling the aspirations of 1.4 billion Indians.

The combination of ease of living provisions pertaining to taxation, along with appropriate allocations for growth-enhancing measures, brings closer the dream of a developed India. The Finance Minister has made it possible to meet multiple demands on scarce resources with her characteristic thoroughness.

In a volatile world where prospects for trade and economic cooperation are diminishing, India needs to speed up growth. To that end, the Budget undertakes that very important task without succumbing to populism in any way. The allocation for capital expenditure is at a historic high of 4.4% of GDP. At Rs12.2 lakh crore, it sets a soaring pace for India’s growth in the coming years.

This approach is timely. India has to focus on self-reliance and domestic growth even as it seeks to remain open to trade and business. The first kartavya strongly emphasises this. Strong economic growth as a pillar of Vikasit Bharat remains the watchword of the Modi Government.

The second kartavya outlined by the Finance Minister, that of fulfilling the aspirations of the vast mass of citizens, is another key pillar of the Modi approach to developing India. It is well-known that cities are the engines of modern growth. The third kartavya, of making sure that families, communities, regions and sectors can achieve their maximum, has been given careful attention in the Budget.

The budget lays down the essential elements required for India to move to a Visit Bharat - balancing the needs of the “now” and the “future."

The emphasis placed on critical minerals, both in terms of allocations for developing the sector and its supply chains, along with taxation proposals, shows the urgency placed by the Modi government on this crucial determinant of growth.

The Government has pronounced tremendous support for solar manufacturing with an eye on critical minerals. This will enable India's clean energy to be globally competitive. The exemption of basic customs duty on sodium antimonate used in the manufacture of solar glass will mitigate input costs for solar manufacturers. As Data centres become vital for India's digital and manufacturing economy, the extension of basic customs duty exemptions on capital goods used for manufacturing lithium-ion cells to include Battery Energy Storage Systems ( BESS ) is a good move for driving energy transition. Path-breaking measures like the India Semiconductor Mission 2.0 signals a bold policy intent.

The continuing focus on Tier 2 and Tier 3 cities that have emerged as potential sources of growth is to be welcomed. These cities and towns house talented manpower that is hungry for growth and opportunities. But the lack of necessary infrastructure hobbles these aspirations. The plan to fund City Economic Regions or CERs is a unique concept that can go a long way in meeting these aspirations. Urban governance in India has its unique challenges that are as much a result of governance issues as much as paucity of financing. The outlay of Rs 5,000 crore per CER over five years will greatly boost this goal.

Meeting these three challenges, framed as kartavyas, is no mean task. Each duty in itself can consume all the resources available to the country at a particular moment. But the Budget manages to do all this—and more!—with great aplomb. These are not mean achievements given that the government has continued on its fiscal consolidation path without a break.

Fiscal deficit in 2026-27 has been estimated at 4.3% of GDP, a reduction over the previous year. This fiscal consolidation speaks volumes about the Modi government’s efforts to take India to the front row in the comity of nations. It takes a great deal of political will and economic sagacity to push for fiscal consolidation - and to that end, the drive to reduce the government’s debt to 50 plus minus 1 per cent of GDP by 2030-31 is not only sustainable but is far-sighted. It is doubly commendable that the Modi government is doing so by keeping inflation in check. Macroeconomic stability is a key factor that keeps India in high esteem in the world.

The Budget is forward-looking in many ways. A blueprint for reforming the banking sector, which the Finance Minister rightly said was vital for India’s growth and development, has been outlined. This has come on the back of key economic reforms like the four labour codes and other measures, such as the rationalisation of Quality Control Orders. These and other rationalisations, such as those of GST rates, will spur economic growth - and in turn, help meet the other vital priorities outlined in the Budget.

At a time when growth and stability elude much of the global economy, the Budget reinforces the importance of clarity in priorities and discipline in execution. The Finance Minister deserves credit for steering policy with a steady hand, combining fiscal responsibility with targeted interventions where they matter most. The Budget underscores that durable growth is built not on trade-offs, but on coherence between economic expansion, social outcomes, and long-term national interest.

(Shashwat Goenka, Vice Chairman, RPSG Group)