The Union Budget 2026–27 is notable less for dramatic announcements and more for its emphasis on continuity, predictability and calibrated reform. In a year marked by global economic uncertainty, persistent
inflationary pressures, geopolitical fragmentation and an uneven global recovery, the government has consciously chosen stability over surprise. The approach reflects a clear policy preference: consolidating earlier reforms, maintaining fiscal discipline and prioritising long-term growth drivers over short-term populism.
Framed around a “threeKartavya” (three duties) framework—accelerating growth, empowering citizens and enhancing inclusivity— the Budget seeks to balance macroeconomic prudence with developmental aspirations. While it broadly meets expectations, its effectiveness will ultimately hinge on execution capacity and the translation of allocations into outcomes on the ground. The centrepiece of the Budget is the continued emphasis on capital expenditure, increased to Rs12.2 lakh crore, an 8-9 per cent rise over the previous year.
This reinforces the government’s belief in CapEx-led growth, given its high multiplier effects on employment, private investment and productivity. The announcement of seven highspeed rail corridors connecting major economic hubs— such as Mumbai–Pune, Pune– Hyderabad and Chennai– Bengaluru—signals an ambition to modernise logistics and reduce travel time across key industrial clusters. If implemented effectively, these projects could enhance regional integration, stimulate job creation and improve India’s competitiveness as a manufacturing and services hub. On taxation, the Budget favours predictability over sweeping reform.
Unlike earlier Budgets that offered substantial personal income tax relief through higher exemption limits or slab restructuring, this year saw minimal changes. While this may disappoint the middle class, it reflects fiscal constraints and the government’s intent to avoid revenue shocks. Procedural improvements, including staggered returnfiling timelines and incremental compliance simplification, are positive steps for salaried individuals and small businesses.
Yet, amid stagnant real wage growth and rising living costs, calibrated tax relief could have supported consumption without undermining fiscal discipline. Its absence indicates a clear tilt towards investment-driven rather than consumption-led growth in the near term. The proposed Rs10,000 crore SME Growth Fund is a welcome acknowledgement of the role of MSMEs as job creators and export drivers.
Dr Manoranjan Sharma is the Chief Economist, Informerics Ratings; Full report freepressjournal.in
