Union Budget 2026–27: Why This Is One of India’s Most Structurally Ambitious Budgets

On the auspicious occasion of Magha Purnima and the birth anniversary of Guru Ravidas, the finance minister, Smt. Nirmala Sitharaman, has presented the Union Budget 2026-27 in Parliament on 01st February, 2026.

The Union Budget 2026–27 is not a Budget designed to grab headlines for one week. It is a Budget that attempts to quietly reshape how India grows, works, invests, and competes over the next two decades. At a time when global trade is uncertain, supply chains are fragile, and technology is disrupting jobs faster than ever, this Budget chooses discipline over drama and direction over giveaways.

Rather than chasing short-term applause, the government has clearly focused on building long-term economic strength through manufacturing depth, services leadership, human capital development, and fiscal credibility. In my opinion, this is one of the most structurally ambitious Budgets of the last decade, even if it may not feel flashy at first glance.

 

A Clear Vision Anchored in Three Duties

The finance minister stated that, “this is the first Budget prepared in Kartavya Bhawan, we are inspired by 3 kartavya:

1. First kartavya: Our first kartavya is to accelerate and sustain economic growth, by enhancing productivity and competitiveness, and building resilience to volatile global dynamics.
2. Second kartavya: Our second kartavya is to fulfil aspirations of our people and build their capacity, making them strong partners in India’s path to prosperity.
3. Third kartavya: Our third kartavya, aligned with our vision of Sabka Sath, Sabka Vikas, is to ensure that every family, community, region and sector has access to resources, amenities and opportunities for meaningful participation.”

The Budget is anchored around three stated responsibilities: accelerating economic growth, building people’s capacity, and ensuring inclusive development. This clarity matters. Instead of scattered announcements, the Budget consistently ties each proposal back to productivity, employment, and resilience.

The emphasis on Viksit Bharat is not verbal. It is supported by reforms in infrastructure, manufacturing, financial markets, taxation, education, health, and governance. Importantly, the government acknowledges that India must remain deeply integrated with global markets while strengthening domestic capacity. This balance is crucial in today’s fractured global economy.

 

Manufacturing Gets a Strategic, Not Cosmetic Push

One of the strongest pillars of this Budget is the manufacturing push across seven strategic and frontier sectors. The Biopharma SHAKTI initiative, semiconductor mission expansion, rare earth corridors, chemical parks, container manufacturing, and capital goods support together signal a shift from assembly-led growth to capability-led growth.

This matters because India cannot become a developed economy on services alone. High-quality manufacturing creates stable jobs, drives exports, and reduces import dependence. The focus on biologics, semiconductors, rare earths, and electronics also aligns India with future global demand rather than yesterday’s industries.

The textile sector reforms deserve special mention. Instead of isolated subsidies, the Budget proposes an integrated approach covering fibres, clusters, skilling, sustainability, and branding. This can genuinely modernise a labour-intensive sector that employs millions.

 

MSMEs Move from Survival to Scale

The Budget finally addresses the core pain points of MSMEs: lack of equity, delayed payments, and high compliance costs. The proposed ₹10,000 crore SME Growth Fund is particularly important because debt alone cannot create national champions. Equity capital allows enterprises to take risks, invest in technology, and scale.

Mandatory use of TReDS by CPSEs, credit guarantees for invoice discounting, and linking GeM with TReDS together can meaningfully improve cash flows for small businesses. In my view, these measures will do more for MSMEs than many past schemes combined.

A notable and often overlooked reform is the creation of “Corporate Mitras”. ICAI, ICSI, and ICMAI have been given a major responsibility here. These professional bodies are tasked with designing short-term, practical courses to create trained para-professionals who can support MSMEs with compliance, governance, and basic financial management. This is a significant shift.

If implemented well, it can reduce the compliance burden on small businesses, create new employment for young professionals, and strengthen the ecosystem of ethical, affordable advisory services across Tier II and Tier III cities.

 

Infrastructure and Cities as Engines of Growth

Public capital expenditure has been increased to ₹12.2 lakh crore, continuing the government’s long-standing belief that infrastructure crowds in private investment. The Infrastructure Risk Guarantee Fund is a smart move because it addresses the biggest concern of private developers, which is risk during construction.

The introduction of City Economic Regions is another structural reform. Instead of focusing only on mega cities, the Budget recognises that Tier II and Tier III cities can become growth engines if planned properly. The proposed funding model based on reforms and results encourages accountability rather than blind spending.

High-speed rail corridors and logistics-focused freight and waterways projects further strengthen India’s competitiveness by reducing transport costs and improving connectivity.

 

Services Sector and Human Capital Take Centre Stage

The renewed emphasis on the services sector is both realistic and necessary. India’s global advantage lies in services, from IT and healthcare to education, tourism, and creative industries. The Education to Employment and Enterprise Standing Committee acknowledges that education policy cannot be disconnected from labour market realities.

The expansion of allied health professionals, caregivers, medical tourism hubs, AVGC labs, design education, and hospitality training shows a clear intent to create future-ready jobs. These are not abstract ideas. They directly respond to global demand and demographic trends.

In my opinion, this is one of the most future-oriented aspects of the Budget.

 

Tax Reforms Focus on Trust, Not Fear

The new Income Tax Act coming into force from April 2026 marks a major shift in approach. Simplified forms, reduced litigation, decriminalisation of minor offences, and rationalised penalties all signal a move towards trust-based compliance.

Relief measures like lower TCS on education, medical expenses, and overseas travel, extended timelines for revised returns, and simplified processes for small taxpayers improve ease of living rather than just ease of doing business.

For corporates and IT services, rationalisation of safe harbour rules and faster APA processes improve certainty. Global investors also benefit from incentives for data centres, bonded warehousing, and toll manufacturing.

 

Fiscal Discipline Remains Intact

Perhaps the most underrated achievement of this Budget is fiscal discipline. The fiscal deficit has been brought down to 4.3 percent while continuing high public investment. The declining debt-to-GDP ratio sends a strong signal to markets and rating agencies.

This balance between growth spending and fiscal prudence is difficult to achieve, and it strengthens India’s macroeconomic credibility.

 

Conclusion: A Serious Budget for a Serious Economy

In conclusion, the Union Budget 2026–27 is not a populist document. It is a serious policy blueprint for a serious economy that wants to compete globally while remaining socially inclusive. Its success will depend heavily on execution, coordination with states, and institutional capacity.

The responsibilities placed on professional bodies like ICAI, ICSI, and ICMAI highlight the government’s belief that nation-building is not the job of the state alone. It requires strong institutions, skilled professionals, and ethical governance.

If implemented with intent and discipline, this Budget has the potential to quietly but fundamentally reshape India’s growth story. It may not excite everyone immediately, but history often rewards such Budgets more than headline-grabbing ones