Davos 2026: Union Budget must focus on spending impact, says PwC India Chairperson Sanjeev Krishan

Sanjeev Krishan, Chairperson of PwC in India, on Tuesday said the upcoming Union Budget should shift its focus from announcing fresh reforms to demonstrating how effectively the government plans to deploy public spending, noting that several structural changes have already been implemented in recent years.

Speaking on India’s economic outlook, Krishan highlighted the country’s resilience through 2025, a year marked by significant policy reforms. He pointed to progress on the so-called “3Ls” — land, labour and litigation — with labour-related issues seeing substantial resolution. According to him, these reforms have strengthened India’s economic foundations and improved its ability to respond to global challenges.

Krishan observed that India has consistently adapted under pressure, often performing better and faster when faced with constraints. He said this adaptability has positioned India to remain the world’s fastest-growing major economy this year. India’s export strategy has also evolved, with companies diversifying their markets beyond traditional geographies, helping mitigate external risks.

On the macroeconomic front, Krishan said conditions remain stable, providing the government with sufficient fiscal space to pursue its priorities. He noted early signs of private investment revival, which he expects will complement ongoing public capital expenditure and support sustained growth momentum.

"India has been very resilient all across 2025. There were bunch of reforms that came in 2025, like the 3Ls- land, labour and litigation. The labour issue was sorted. This is a journey. At times, when you are pushed to the brinks almost, you perform better and faster. Clearly, India has shown the path. And India is going to largest growing economy this year. If you look at our exports basket, now we are looking at different countries. We have responded to challenges very well. At this point, the macros are in a good state at this point in time. I feel there is enough fiscal space for the government to do what it wishes to do. I can see some green shoots of private investment already to supplement the public investment."

Turning specifically to the Budget, Krishan said the emphasis should now be on expenditure quality and impact. With reforms such as GST rationalisation and multiple free trade agreements already in place, he argued that the key question is how government spending can be used to unlock productivity and competitiveness.

He identified two to three critical focus areas. The first is enhancing productivity across services, industry and manufacturing. The second is strengthening India’s competitive edge in services by investing heavily in skill development to ensure the workforce remains at the cutting edge. Krishan also underscored the importance of scale, stating that achieving scale can provide a decisive cost advantage and improve India’s competitiveness in the global economy.

He added: "I feel there can two or three areas, which I believe the government should focus. One -- how to enhance productivity across our services and industrial and manufacturing segments. Two -- how do we make sure that our competitive advantage, which is our services, we are able to invest in skilling our people so that we can continue be at an cutting edge. Also, scale has been an issue. We need to acknowledge that scale give us competitive advantage and gets you the factor cost you need to be competitive in this world." 

On trade policy, Krishan drew attention to the relatively low utilisation of India’s free trade agreements (FTAs). He noted that India’s FTA leverage rate stands at around 25%, compared with 70% to 80% for many other countries. While acknowledging that certain anomalies need to be addressed, he said the larger priority should be improving the effective use of FTAs, which could significantly enhance export performance.

“India’s FTA utilisation rate or leverage rate is about 25%, whereas for most countries it is 70% to 80%. There are aberrations to be solved, but it is more about making sure that we are able to leverage the FTAs better,” Krishan said, adding that improved utilisation could act as a major growth enabler.

India has already begun stepping up efforts to improve FTA usage as part of a broader export strategy. An analysis by the Commerce Ministry in August 2025 showed that India’s merchandise exports recorded positive growth in 26 out of 40 key focus countries between April and July, while exports declined in 14 countries. Commerce ministry officials have said ongoing exercises are aimed at helping existing FTAs reach their “saturation point” through targeted facilitation, simplified processes and greater awareness among businesses.

Recent data suggests utilisation under some agreements remains strong. Under the India-Australia Economic Cooperation and Trade Agreement, export utilisation stands at 84%, while import utilisation is at 86%.