By Ashok Hinduja
Finance Minister Nirmala Sitharaman’s Union Budget signals bold continuity in reforms, anchoring India’s Viksit Bharat vision amid global uncertainty.
The Budget projects a steady 7.6% gross domestic product (GDP) growth for 2026-27, matching fiscal year 2025-26, while prioritising employment in services, financial stability, farmer incomes, MSME expansion, development of the Northeast region, fisheries, animal husbandry, skilling, education, as well as sports infrastructure — addressing the country’s youth aspirations head-on.
This Union Budget masterfully balances middle-class relief with growth imperatives, tightening fiscal consolidation, and issuing a clarion call to the private sector — invest now to seize the current decade’s opportunities as well as navigate rising protectionism globally.
Fiscal deficit targets 4.3% of GDP for FY27 — down from 4.4% — committing to sub-4.5% thresholds and a debt-to-GDP trajectory towards 50% by 2030-31 from 56.1%.
Capital Expenditure Surge
Capital expenditure (capex) surges to Rs 12.2 lakh crore from Rs 11.21 lakh crore, fuelling high-speed railway network, chemical parks, and power incentives for data centre surge.
At the same time, in a world characterised by disrupted capital flows — especially where sound economics face geopolitical headwinds — fiscal prudence must ignite private capex; disinvestment in mission mode remains fiscal planning’s Achilles’ heel.
Supply-side sharpeners target manufacturing resurgence — India Semiconductor Mission 2.0 with tax holidays for data centres and cloud services draws global chipmakers, fortifying ecosystems alongside rare earths, biosimilars, and clean tech.
Electric bus adoption, mining-to-port connectivity, dedicated freight corridors, and 200 legacy cluster rejuvenations — plus mega textile parks — boost competitiveness, especially with impending India-EU FTA (free trade agreememt) market access. These labour-intensive moves tackle employment at scale.
In such a scenario, at least two game-changers have emerged. First, a high-level banking committee to interrogate public sector banks’ dominance for the fitness of Viksit Bharat, probing governance, capital, and credit flows.
Second, an education-to-employment panel for the services sector — bridging the employability chasm. In the current demographic dividend era, these could redefine growth engines.
Customs cuts on lithium-ion batteries, cobalt, electronics, telecom inputs, solar glass sodium, life-saving drugs, and EV/mobile capital goods enable ‘intelligent self-reliance’ — import substitution without isolationism.
Tax Simplification Measures
Building on the new tax regime, the Budget simplifies slabs via a new Income Tax Bill, cuts TDS/TCS rates, extends revised return filing, slashes duties on critical disease medicines, and shifts minor offences to penalties over prosecution — with courts empowered to convert imprisonments to fines, these streamline compliance.
Rising STT (securities transaction tax) on derivatives, however, risks dampening capital market liquidity. Stability aids planning, yet inflation demands bolder relief to unlock consumption as growth’s next engine.
In the current protectionist paradox — where strong macros no longer are able to guarantee inflows — this year’s Union Budget positions India as indispensable in the global value chain. Private investment must bridge execution gaps; FTAs, reforms, and US trade agreements could turbocharge FY27.
Finally, we applaud all of these as a stability-scale bridge — prudence over populism. Execution defines destiny; the private sector’s bold response will accelerate it.
The author is Chairman at Hinduja Group of Companies (India)
Disclaimer: The views expressed are the author’s own and do not reflect the official policy or position of Financial Express.