Budget 2026: 'A budget for the real economy' - Uday Kotak backs fiscal discipline, defence spend hike

Union Budget 2026 | Kotak Bank founder Uday Kotak on Sunday welcomed Finance Minister Nirmala Sitharaman's Budget 2026, calling it "a budget for the real economy" and flagging the government's continued push on defence spending and fiscal discipline.

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"Budget first take. A budget for the real economy. Welcome increase in defence spend. Broad fiscal discipline continues. Works on balancing between financialisation of the economy, and focused development of diverse, deep India long term," Kotak said in his reaction to the Budget.

Sitharaman earlier in the day laid out the government's fiscal consolidation roadmap in her Budget speech, stating that the fiscal deficit has already been brought below the earlier target of 4.5% of GDP by FY26.

"One of the main operational instruments for debt targeting is the fiscal deficit. I am happy to inform this august House that I have fulfilled my commitment made in FY 2021-22 to reduce fiscal deficit below 4.5 per cent of GDP by 2025-26," Sitharaman said.

She added that the deficit level has been maintained at the Budget Estimate level for FY26. "In RE 2025-26, the fiscal deficit has been estimated at par with BE of 2025-26 at 4.4 per cent of GDP," she said.

The finance minister further outlined the next step in the government's debt consolidation plan. "In line with the new fiscal prudence path of debt consolidation, the fiscal deficit in BE 2026-27 is estimated to be 4.3 per cent of GDP," she said.

On the public investment front, Sitharaman said the government will continue to raise capital expenditure to sustain infrastructure momentum. "Public capex has increased manifold from Rs 2 lakh crore in FY2014-15 to an allocation of Rs 11.2 lakh crore in BE 2025-26. In FY2026-27, I propose to increase it to Rs 12.2 lakh crore to continue the momentum," she said.

The Union Budget 2026 also saw a sharp step-up in defence allocations. Sitharaman announced an outlay of Rs 5.95 lakh crore on February 1, marking an increase of 21% from last year’s budgeted Rs 4.92 lakh crore allocation. The hike includes a 21% rise in overall defence capital expenditure. As a result, defence spending has risen to 11% of GDP in FY26, from around 8% in the previous year.