Budget 2026: As the Union Budget 2026 approaches, market participants are closely tracking key macro numbers such as fiscal deficit, capital expenditure
and nominal GDP growth, which are expected to set the tone for equities and bonds in the coming year. In conversation with ET Now Swadesh, Sunny Agrawal, Head of Fundamental Equity Research at SBI Securities, said the upcoming Budget is likely to remain focused on fiscal consolidation while continuing support for growth through higher government spending.
According to the market expert, the fiscal deficit remains the most closely watched number in the Budget. “For FY26, the government had set a fiscal deficit target of 4.4 per cent of GDP, and looking at the current trends, that target appears achievable,” he said.
Agrawal also said that the government may continue with its glide path of fiscal consolidation in the coming year as well.
“For the next financial year, the fiscal deficit could be guided closer to 4.2–4.3 per cent of GDP, in line with the finance ministry’s long-term consolidation roadmap,” Agrawal said.
Nominal GDP growth seen around 10%
Another key number that markets will track is nominal GDP growth, which forms the base for several Budget calculations.
Agrawal expects nominal GDP growth in the range of 10–10.5 per cent for the coming year, driven by real GDP growth of 6.5–7 per cent and inflation of around 3 per cent.
“Once you break it down, the numbers look realistic and achievable,” he said.
Capex push remains critical for market sentiment
Government capital expenditure is expected to remain a major positive trigger for markets.
Last year, the Centre had budgeted capital expenditure of around Rs 11.2 lakh crore. Agrawal said the market would react positively if the government announces a 10–11 per cent increase in capex in the upcoming Budget.
“If we see double-digit growth in capex again, the market could give it a big thumbs-up,” he said.
He also noted that government net borrowing, estimated at around Rs 12 lakh crore, will be another crucial number to watch. A borrowing figure within market expectations would help keep bond yields stable, while any sharp increase could lead to some hardening in yields.
Defence, railways and manufacturing in focus
On the sectoral front, Agrawal expects higher allocations for defence and railways, given the government’s continued emphasis on infrastructure and self-reliance.
He also expects renewed focus on domestic manufacturing, with higher allocations for Production-Linked Incentive (PLI) schemes.
At the same time, he said the government is likely to keep the subsidy bill largely flat, which would be seen as a positive signal from a fiscal discipline perspective.
New-age sectors, rural economy and housing to get support
Agrawal said select new-age sectors such as data centres, semiconductors and critical minerals could see fresh policy support, given their importance for long-term economic growth.
On the rural front, flagship schemes such as MNREGA may receive higher allocations to support employment and rural demand.
Affordable housing could also emerge as a focus area, with possible relaxation in eligibility criteria to bring more housing units under government schemes.
Export-oriented sectors seek relief
Export-focused sectors such as textiles are expected to seek targeted support amid global trade challenges. Industry participants are hopeful of special schemes or incentives to offset pressures arising from global uncertainties.
Budget seen as a directional document
Agrawal said the Union Budget should be viewed more as a directional document rather than a one-day event.
“The Budget gives a clear indication of where the government intends to focus over the next 12 months. But reforms and policy measures continue throughout the year,” he said.
Overall, experts believe Budget 2026 is likely to balance fiscal discipline with growth support, providing clarity to markets on the government’s medium-term priorities.
(Disclaimer: The above article is meant for informational purposes only, and should not be considered as any investment advice. ET NOW DIGITAL suggests its readers/audience to consult their financial advisors before making any money related decisions.)
