Bhavesh Shah, Managing Director and Head Investment Banking, Equirus Capital
India Budget 2026 reinforces the government’s commitment to continuity of reforms, policy stability and the long-term vision of Viksit Bharat. In a volatile global environment, the Budget’s biggest strength lies in its predictability—building on a decade of structural reforms rather than introducing disruptive shifts. This consistency is critical, especially as India targets sustained real GDP growth of 6.5–7% over the medium term.
Fiscal discipline remains a clear anchor. The government has reiterated its fiscal consolidation roadmap, with the fiscal deficit targeted to trend below 4.5% of GDP over the next two years, even while maintaining elevated capital expenditure. Capex continues to account for over 3.3% of GDP, creating a strong multiplier effect—every ₹1 of public capex is estimated to generate ₹2.5–3 of incremental GDP while crowding in private investment.
Manufacturing remains central to the growth strategy. PLI schemes across electronics, pharmaceuticals, chemicals and renewables are being refined to improve scale, localisation and export competitiveness. India’s manufacturing exports, currently at ~$450 billion, are targeted to cross $1 trillion by the end of the decade, positioning India as a credible alternative in global supply chains.
The Budget also strengthens traditional and indigenous sectors. Textiles, employing over 45 million people, receive continued support through cluster modernisation and export incentives. Local sectors such as Ayurveda, medicinal plants and sandalwood are being integrated into formal value chains, supported by standardisation, R&D and global certification—unlocking India’s growing share in the $500+ billion global wellness market.
A notable thrust is on Tier-2 and Tier-3 cities and the North-East. Increased infrastructure allocations, logistics corridors, MSME credit support and tourism-led development aim to decentralise growth. With nearly 60% of India’s future consumption expected to come from non-metro regions, this focus enhances both inclusivity and economic resilience.
Overall, Budget 2026 blends fiscal prudence with growth ambition—deepening manufacturing, leveraging traditional strengths and ensuring that India’s growth story is broad-based, sustainable and globally competitive.
