New Delhi: As Budget 2026 approaches, the biggest concern for the common man remains clear: will taxes come down or will daily expenses rise further? A recent Morgan Stanley report offers important clues
about the government’s possible strategy, indicating a cautious approach on tax relief and a stronger focus on long-term growth.
Limited Tax Relief Likely
The report suggests that major income tax cuts are unlikely in Budget 2026. In the previous budget, personal income tax reductions impacted tax collections, with growth falling well below expectations. To avoid further pressure on revenue, the government may opt for small adjustments—such as minor slab tweaks, rebate fine-tuning, or limited exemptions—rather than sweeping tax relief.
Impact on Inflation and Daily Expenses
With lower tax collections and higher spending needs, the government may explore alternative revenue options. This could include revisions in subsidies or indirect levies, which may affect prices of essential items.
There are no strong signals of relief on petrol and diesel, while electricity, gas, and some services could face mild price pressure if subsidies are rationalised.
Focus on Infrastructure and Social Spending
Morgan Stanley highlights that Budget 2026 is likely to prioritise capital expenditure. Key focus areas may include roads, railways, urban infrastructure, water supply, healthcare, and education. While this may not immediately reduce household expenses, it can significantly improve public services and quality of life over time.
Boost for Jobs and MSMEs
The report also points to policy support for MSMEs and employment generation. Easier credit, skill development initiatives, and support for digital capabilities could help small businesses grow and create new jobs, indirectly strengthening household incomes.
What May Get Cheaper or Costlier?
May Get Cheaper:
- Domestically manufactured goods
- Electronics and tech products
- Affordable housing
May Get Costlier:
- Petrol and diesel
- Fertilisers (possible subsidy cuts)
- Luxury and imported items
Budget 2026 is expected to be prudent rather than populist. While big tax relief for the common man may be limited, higher spending on infrastructure, jobs, and social services could offer long-term benefits and economic stability.
