Budget 2026: Overview
The Union Budget 2026, slated for February 1, is crucial for India's economic trajectory. Expectations are high, with industry leaders and taxpayers keenly
awaiting announcements. The Finance Ministry is tasked with putting together the ninth budget under the guidance of Nirmala Sitharaman. The budget is not just an account of government finances but a roadmap for future growth, outlining spending priorities, tax policies, and economic strategies. Tax experts are seeking clarity on several tax-related matters, and faster dispute resolutions for ease of doing business. The Economic Survey 2026, scheduled for Thursday, will offer an overview of the economy, providing context for the budgetary decisions.
Infrastructure Spending Push
Industry leaders are urging the government to significantly increase infrastructure spending, potentially doubling it to Rs 3 lakh crore. Such a move is expected to stimulate economic activity and boost growth across various sectors. The focus on infrastructure development aligns with the government's broader vision for long-term economic expansion. The increased investments would likely target areas such as transportation, energy, and urban development. Furthermore, these investments would stimulate job creation and support the growth of related industries, contributing to an overall positive impact on the economy.
Tax Regime Adjustments
Taxpayers and experts are eager to see potential changes in the existing tax regimes. There is a demand for higher deductions and reliefs under the current 30% tax slab. The new tax regime may include deductions for home loans and health insurance, making it more attractive. Experts suggest that the government could consider adjustments to these regimes to simplify the tax structure and potentially offer financial advantages to taxpayers. These adjustments are aimed at streamlining the tax process and ensuring fair and equitable tax treatment. Discussions regarding the phasing out of the old tax regime are also taking place, adding to the complexity of the landscape.
India-EU Trade Deal
The India-EU Free Trade Agreement is anticipated to boost the competitiveness of Indian exports within the EU market. The trade deal is expected to cut tariffs on over 90% of goods, with items like wine and chocolate possibly entering the market with zero duty. Experts are recommending specific stocks for long-term investment, anticipating growth due to the agreement. EU firms are optimistic about growth in India, expecting the deal to unlock the next phase of expansion. This development could reshape trade relations and stimulate economic growth in India and the EU.
Market Reactions & Trends
Several market dynamics are worth noting. Experts are tracking the potential impact of the budget on the stock market and various sectors. Market sentiment is influenced by expectations surrounding the budget. The gold and silver markets are experiencing fluctuations, with investors facing decisions amid price increases. The recent rally in silver, with prices hitting Rs 4 lakh, reflects increased demand. Conversely, gold's performance is being closely watched, with Motilal Oswal suggesting that gold may offer better near-term risk-reward after silver's remarkable 200% rally. The performance of specific stocks, like those recommended for long-term investment, will also be closely tracked.
Other Key Expectations
Beyond major themes, expectations include the potential for simpler tax provisions, as the new income tax rules are set to take effect from April 1. There is also a push for faster dispute resolution mechanisms to improve the ease of doing business. Furthermore, experts are looking for guidance on streamlining the tax processes. Morgan Stanley flags key reforms needed across auto, telecom, railways, and defense sectors. The government's moves and reforms are anticipated to have a considerable impact on the economy.
